Climate Change: Shipping

Lord Higgins: asked Her Majesty's Government:
	What assessment they have made of the extent to which transport by sea is likely to affect global warming.

Lord Adonis: My Lords, estimating global greenhouse gas emissions from shipping is challenging due to a lack of data and scientific uncertainty on overall impacts. However, the International Maritime Organization estimates annual carbon dioxide emissions from international and domestic shipping at approximately 1,019 million tonnes, which is 3.3 per cent of total global emissions. Work is continuing to estimate the global climate impacts from the emission from ships of black carbon and nitrogen oxides, which are more uncertain.

Lord Higgins: My Lords, I thank the Minister for that reply. Since more than 90 per cent of world trade is carried by ship, shipping is naturally a large contributor to global gas emissions. On the other hand, it is the most efficient form of transport. In view of the various proposals for regulation that have been put forward, does the Minister agree that a global system under the IMO is likely to be far more effective than a regional system? If one has a purely European system, there is some danger that the competitive position of British shipping, which is of great importance to the UK economy, not least with regard to the balance of payments, could be jeopardised, so any system has to be flag-neutral.

Lord Adonis: My Lords, as the noble Lord will be aware, the secretary-general of the IMO has stated that he wishes agreement on measures to reduce greenhouse gas emissions from ships to be achieved at the IMO assembly in late 2009. We strongly support that way forward. The most likely scenario for progress within the IMO by 2009 is agreement on a CO2 design index for new ships, as proposed by Japan, along with a voluntary operational CO2 index, a management plan for current ships and a range of voluntary operational and technological improvements so that we get the global approach that the noble Lord seeks.

Lord Berkeley: My Lords, is my noble friend aware of a rather more pressing issue facing the maritime industry, which is a strike called next week by workers in the port of Dover? It will effectively close the port for several days. Given that the Channel Tunnel is working at part capacity and that most of our imports come from the Continent through Dover, what action is my noble friend taking to try to meet the parties to the dispute and resolve it?

Lord Adonis: My Lords, the industrial dispute to which my noble friend refers is a matter for Dover Harbour Board to resolve. It is a trust port and independent of governments. We are told that the port has detailed contingency plans in place to minimise any disruption to its customers during the strike action announced this week, and I note that the chief executive was quoted yesterday as saying:
	"We have put in place a thorough contingency plan with particular emphasis firstly on safety and security, and secondly on maintaining regular ferry services which will ensure the port remains open in the event of any industrial action prior to the implementation of the new arrangements".

Lord Lee of Trafford: My Lords, given the significant percentage figures that the Minister quoted earlier, is it not essential that shipping is included in Europe's emission trading scheme at the earliest opportunity?

Lord Adonis: My Lords, we are in discussions on that issue but, as I said in an earlier answer, we are also strongly supportive of a global approach to the issue through the IMO and we note that the secretary-general of the IMO is also committed to seeking a way forward on an international basis.

Earl Attlee: My Lords, if I may also stray very slightly from the Question, will the Minister join me in congratulating the Royal Navy on starting to get to grips with the pirates off the coast of Somalia?

Lord Adonis: My Lords, I think so.

Baroness McIntosh of Hudnall: My Lords, getting back to the Question, I think that my noble friend said that the current rate of emission from shipping is 3.3 per cent of total emissions. What is the rate of growth of emissions from shipping, and can he put that in the context of rates of growth in other industries, especially aviation?

Lord Adonis: My Lords, the IMO's estimates suggest that the 843 million tonnes of CO2 emissions, which is its base case for international emissions as of 2007, will rise to between 925 million tonnes and 1,058 million tonnes by 2020 and 1,903 million tonnes to 2,668 million tonnes by 2050, which is an average annual growth rate of between 1.9 per cent and 2.7 per cent. I do not have the comparable statistics for aviation to hand, but I will let my noble friend have them.

The Countess of Mar: My Lords, as we seem to be so keen on wind power on land for energy generation, has any thought been given to combining wind power for shipping—in other words, sails—with mechanical power driven by oil?

Lord Adonis: My Lords, that is a question for my noble friend Lord Hunt of Kings Heath, who knows so much about energy generation from his new departmental responsibilities. I do not have an immediate answer to the question, but I will write to the noble Countess.

Lord Livsey of Talgarth: My Lords, will the Minister take account of the likely downturn in world trade as a result of the credit crunch, and so on? That will reduce the volume of shipping. My father was a master mariner after the Wall Street crash, when the shipping trade nearly dried up completely—in fact, he lost his job as a result. What impact will the downturn have on global warming, for example?

Lord Adonis: My Lords, the reason why the IMO has published a range of statistics is to take account of different scenarios for both the growth of shipping and economic growth in the period ahead. I think that the noble Lord would accept that short-run changes in economic growth do not avoid the need to take action in respect of changes in greenhouse gas emissions that may take place over 40 to 50 years.

Lord Brooke of Sutton Mandeville: My Lords, pursuant to the Minister's answer to my noble friend Lord Attlee, does he recall that in the last quarter of the 19th century, the Royal Navy swept slave trading from the waters off east Africa?

Lord Adonis: My Lords, I do indeed recall that.

NATO: Georgia and Ukraine

Lord Skidelsky: asked Her Majesty's Government:
	Whether they support the accession of Georgia and Ukraine to NATO.

Lord Malloch-Brown: My Lords, we remain committed to the decision made by NATO heads of state and government at the Bucharest summit in April 2008 that Georgia and Ukraine will become members of NATO. December's meeting of NATO Foreign Ministers will provide the first review of progress so far.

Lord Skidelsky: My Lords, I thank the Minister for that reply. Given Georgia's disputed territorial frontiers, mounting evidence that Georgia was indeed the aggressor in the war with Russia in August, and the deep political fissures in Ukraine, does he agree that the early accession of these countries to NATO would be dangerous and undesirable? Will the Government join their European allies—France, Germany, Italy and Spain—in pressing that view at the NATO Foreign Ministers' meeting in Budapest on 2 and 3 December, even if it goes against the wishes of a dying American Administration?

Lord Malloch-Brown: My Lords, a European commission is investigating who started the war, and we should wait to see what it can uncover about the circumstances in which this conflict began. However it began, we can also conclude that the Russian response was disproportionate. As to the meeting in December, I assure the noble Lord that there is very unlikely to be an early accession to NATO. There is a recognition that the umbrella, if you like, of future membership is important to these two countries—to their security, economic development and political development—but that should not be done in a way that is provocative or before they have developed the necessary internal societies that comport with membership of NATO.

Lord Morris of Aberavon: My Lords, I am encouraged by the Minister's reply. Was it wise for the Foreign Secretary to go to Kiev—apparently, at a week's notice—to give encouragement at that difficult time and to continue to support Ukraine's application to NATO? Would it not be better to hesitate a little until the situation has clarified? Furthermore, in view of the mutual defence commitment under Article 5 and the fact that British interests count as well as those of applicants, should we enter into mutual defence commitments that we possibly cannot hope to fulfil?

Lord Malloch-Brown: My Lords, it was important that the Foreign Secretary made it clear that there was no backing down under Russian force from commitments that had been already made. However, this certainly needs to be advanced with an understanding of the Russian point of view. The goal remains membership, but the path to full membership needs to be cautious.

Baroness Williams of Crosby: My Lords, does the Minister agree that co-operation between the new American Administration and the Government of Russia is crucial if we are to get any forward moves on disarmament and, for that matter, on nuclear proliferation? Given that, does he agree that consultation with Russia on the expansion of NATO might be very important? Although no one could condone the scale of the Russian reaction to the Georgian feint into South Ossetia, the level of responsibility is by no means clear, and perhaps we should consider Russian concerns about encirclement when we proceed further.

Lord Malloch-Brown: My Lords, the noble Baroness makes the case very elegantly. The decision by European Ministers last week reflected the fact that it was important to restart the dialogue with Russia on a successor to the European partnership agreement, but also to ensure that these issues of Russian behaviour towards Georgia, and indeed towards Ukraine, become part of that dialogue. However, she is correct; the process is to talk through these issues.

Lord Inglewood: My Lords, have the Russian troops in Georgia retired to the positions agreed in the ceasefire?

Lord Malloch-Brown: My Lords, we do not yet have the complete compliance with the ceasefire arrangement that we would like.

Lord Grocott: My Lords, on the more general point, as there is no obvious connection in most people's minds between Georgia and Ukraine on the one hand and the north Atlantic on the other, is there any geographical boundary that would define the applicants that could be considered as members of the North Atlantic Treaty Organisation?

Lord Malloch-Brown: My Lords, the original purpose of the North Atlantic Treaty Organisation, which was an alliance against a resurgent Soviet Union, has obviously been overtaken by circumstances. It always was a defensive alliance, but its purposes have changed to reflect the new realities. Therefore, countries in this region that commit to its principles can be seen as joining over time, but in a way that must be seen as unthreatening to Russia.

Lord Tebbit: My Lords, does the Minister recollect that the purpose of NATO, as defined by General Pug Ismay a long time ago, was to keep the Americans in, the Germans down and the Russians out? But the world has changed rather since then. Does he agree that offering NATO membership to these countries is almost as provocative as it would have been for the Russians to offer Warsaw Pact membership to Belgium or even the Isle of Wight?

Lord Malloch-Brown: My Lords, the noble Lord is in good company in making that argument—George Shultz and Henry Kissinger have made a similar argument in the American media. That is why we need to have a balance between the commitment to membership, which we should not back away from because of the action in South Ossetia, and understand that that commitment must be advanced in a way that is not provocative or unfair to Russian interests.

Lord Tomlinson: My Lords, does my noble friend accept that in the short term it is important that we get Georgia and Russia to accept their obligations as members of the Council of Europe where they are in breach of their membership obligations? They are in breach of the European Convention on Human Rights, and it is absolutely clear that those obligations have to be fully met, fully understood and fully accepted before we consider their membership for any other international organisation.

Lord Malloch-Brown: My Lords, my noble friend correctly points to the fact that there remain important outstanding human rights issues. Displaced people have been unable to go home, and there are issues of violence and of who originated it, all of which need to be sorted out. The Council of Europe is playing a lead role in that. There will be no solution to this issue that does not address the injustices that took place during the conflict.

Nepal: Human Rights

The Earl of Sandwich: asked Her Majesty's Government:
	What is their response to the findings of the joint Advocacy Forum and Human Rights Watch report on government accountability for killings and disappearances in Nepal over the last decade.

Lord Malloch-Brown: My Lords, we welcome the report published by the Advocacy Forum and Human Rights Watch,Unpunished Crimes from Nepal's Armed Conflict. As the report highlights, the continuing failure to tackle previous human rights abuses risks undermining the progress that Nepal has made towards democracy. The UK has consistently urged the Government of Nepal to tackle impunity and to ensure justice for victims of killings and disappearances. We will continue to raise the serious issues that are highlighted in the report.

The Earl of Sandwich: My Lords, I thank the Minister for that reassurance. However, two years after the end of the civil war, the Nepal Army is still resisting police investigation, which is quite legitimately required by civilians, into cases of alleged extrajudicial killings. There were 47 cases of alleged killings, disappearances, torture in custody or rape committed by the security forces between 2002 and 2006. That figure does not include the atrocities by the Maoist forces. Will the Minister confirm that he met the army chief of staff, General Katawal, who gave him a personal reassurance that the army would comply with these investigations? What can the international community and the UN do about this to further the cause of human rights in Nepal?

Lord Malloch-Brown: My Lords, I congratulate the noble Lord on having brought attention to this issue. There is now a new, democratically elected Government in Nepal, of whom the leading party is the Maoist movement. Like any new democratic Government, they have to assert their authority over the national army. The noble Lord is right: I have raised this twice with the head of the national army, both in Nepal and in London. Compliance is critical, but Nepal is a country badly in need of a truth and reconciliation commission of some kind. The human rights abuses were on all sides and the process of healing needs the truth to be arrived at about atrocities committed by not only the Maoist side but also the national army.

Baroness Whitaker: My Lords, my noble friend will know that there has been a National Human Rights Commission in Nepal for some time. Can he inform the House what its role has been in relation to the alleged violations of human rights and what progress there has been not only in the setting up of the truth and reconciliation commission to which he referred but the commission on disappearances?

Lord Malloch-Brown: My Lords, we have supported the National Human Rights Commission to which my noble friend refers financially as well as, if you like, morally. It has a unique constitutional responsibility in Nepal to protect the rights of the people. However, we go on reminding the Government that it is not sufficient: it needs to be supported by a truth and reconciliation commission and, perhaps most critically, its findings need to be acted on.

Baroness Rawlings: My Lords, to go back to the noble Lord's response to the noble Earl, Lord Sandwich, what progress has been made with the Government of Nepal in setting up the truth and reconciliation commission and the commission on disappearances?

Lord Malloch-Brown: My Lords, unfortunately there has not yet been any discernible progress.

Lord Avebury: My Lords, while acknowledging that enormous problems remain to be solved, should we not congratulate Mr Ian Martin on his outstanding achievements during his term of office as head of the United Nations Mission in Nepal, including the advent of a democratically elected Government? What further steps does the noble Lord think that we should now take to complete the process of demobilisation, disarming and reintegration in respect of the 19,000 former combatants who are still in cantonments and to persuade the parties that they should collaborate in the arrangements that are being projected for this purpose?

Lord Malloch-Brown: My Lords, I certainly join the noble Lord in congratulating Ian Martin, a remarkable international civil servant who began his career here in the UK with Amnesty International. All parties would agree that he has played an extraordinary role. The renewal of UNMIN is just coming up. At this point, the Government of Nepal have yet to make a request for what continuing capacity they want but, while we must balance the needs of all these missions and their budgetary consequences, we do not want to wind up DDR activities in Nepal prematurely.

Baroness Verma: My Lords, given that Great Britain is a large donor country to Nepal, what is it doing to address with the Nepalese Government the increasing incidence of violence against women? How do the Government track the aid given to Nepal?

Lord Malloch-Brown: My Lords, as the noble Baroness correctly points out, we are indeed one of the major donors to Nepal. I should say that over the past 10 years there has been a striking reduction in the incidence of poverty in Nepal. Aid and development are working despite the difficult political situation. Moreover, we do a lot on gender issues in the country.

Lord Elton: My Lords, is it the case that the Nepalese army, which had custody of 15 year-old Maina Sunuwar when she died in February 2004, is still refusing to give evidence to the police? The army has carried out its own inquiry, but it will not permit the police to cross-examine any of its members.

Lord Malloch-Brown: My Lords, I raised this case with the head of the Nepalese army. At the time he gave me undertakings that the army would co-operate, but I am afraid to have to report to the noble Lord that it has not so far done so.

Earl Attlee: My Lords, is there any truth in the suggestion that the UN has been sending remittances direct to the Nepalese army rather than to the Nepalese Government?

Lord Malloch-Brown: My Lords, for the second time this morning, we will have to get back to the noble Earl.

Baroness Miller of Chilthorne Domer: My Lords, the Government are currently resisting the amendment tabled by my noble friend Lord Goodhart that attempts to define the difference between a freedom fighter and a terrorist. Can the Minister explain what the Government see as the difference between the two in a country that does not have free and fair elections?

Lord Malloch-Brown: My Lords, I can answer only in the context of Nepal, where free and fair elections were held. A long-time insurgency has been successfully brought into the democratic mainstream; it prevailed at the polls and now governs in partnership with other parties in the framework of a democratic Parliament and constitution. While it is a fragile start, this appears to be a clear case of the success that one can achieve in many areas around the world when yesterday's freedom fighters—or, in the eyes of some, yesterday's terrorists—are brought back into the political mainstream.

Lord Campbell-Savours: My Lords—

Lord Hunt of Kings Heath: My Lords, I should say to my noble friend that we are now in the 24th minute.

Post Office: Financial Services

Lord Faulkner of Worcester: asked Her Majesty's Government:
	Whether they plan to increase the financial services role of Post Office Ltd.

Lord Mandelson: My Lords, the Post Office has increased the range of financial services and products available through the post office network with considerable success in recent years. The Government welcome these initiatives and will be exploring with the company the scope for developing and introducing further financial services which will be attractive to Post Office customers.

Lord Faulkner of Worcester: My Lords, I thank my noble friend for that Answer, and I look forward to the Statement which we are to receive later. Is he aware that there is very considerable support on these Benches and, I suspect, elsewhere for the views reportedly expressed by my noble friend in a letter to the Prime Minister on 30 October which was reported in the Guardian on Tuesday? It stated:
	"we should examine the prospects for Post Office Ltd becoming a much more significant player in financial services—offering a wider range of attractive products within easy reach of the whole population, available from an institution they can trust".
	Is this not now exactly the right time when we should be looking at plans for a people's bank based on the Post Office, the transfer of much more of the Government's own business to it and an end to any further branch closures?

Lord Mandelson: My Lords, I obviously cannot comment on private correspondence between myself and the Prime Minister, tempting as it may be, but I share very strongly my noble friend's sentiments about the future of the Post Office. I do not have a master plan or a magic wand to transform the Post Office, but I do have strong faith in its future, not just as an anchor for local communities but as a serious business proposition.

Lord Hunt of Wirral: My Lords, may I welcome the Secretary of State, and say how much we all look forward to that great day when we at last hear just one important announcement from him here in Parliament before it appears first in the media? Is he aware that much of British business, and post offices, are now in a battle for survival? Almost 5,000 post offices have closed since 1997 and it is anticipated that, by the time of the next general election, around a third of the entire network will have been lost on this Government's watch. These nebulous proposals would represent a considerable U-turn, and raise more questions than answers. The noble Lord chairs the Cabinet committee charged with reviewing the future of the Post Office network. When will he be coming forward with more detailed proposals, and when is he going to publish the Hooper report?

Lord Mandelson: My Lords, I hope that the Hooper report on how best to maintain the universal service obligation in a competitive postal services market will be published before much longer. I have already met Mr Hooper, and his findings are at an advanced stage. I believe very strongly that we have an opportunity here for the future of the Post Office, one that has been enlarged by the turbulence elsewhere in the financial services sector. The recent rationalisation of the network obviously has not been painless, but it has placed it on a firmer footing. I believe that more can be achieved to expand the Post Office's financial services to its customers, and that is precisely what I am going to examine.

Lord Razzall: My Lords, the whole House will endorse the remarks of the noble Lord, Lord Faulkner, in welcoming the apparent progress towards stabilising the Post Office network. But, putting the question of the noble Lord, Lord Hunt, into some context, does the Minister accept that, as we speak, many sub-postmasters will be contemplating whether or not to close their operations after the Christmas trading period? What comfort can he give them as to timing and to why they should stay open?

Lord Mandelson: My Lords, the programme of rationalisation undertaken by the Government has definitely placed the entire network on a much firmer footing. A government funding package of up to £1.7 billion is in place to support the nationwide network of 11,500 branches to 2011, providing reasonable access for all. This includes a network subsidy of £150 million a year to support some 7,500 non-commercial offices. So the Government are doing their bit. They have demonstrated their commitment, and we will maintain that commitment.

Lord Clarke of Hampstead: My Lords, does the Minister agree that the highly popular, efficient and straightforward banking service provided by the Post Office through the National Girobank was a very successful operation? It was a tragedy when it was, some would say sold off, but I would say given away to the Alliance and Leicester for £118 million. At that time thousands of people were waiting to open accounts with National Giro. In the further consideration that the Minister has said he will give to Post Office affairs, does he not think that it is now time to look again at reintroducing National Girobank?

Lord Mandelson: My Lords, I take note of what my noble friend has said. In the first instance I am going to convene a group of government departments to identify the potential additional work that the Post Office may do. There are opportunities there and we want to examine them closely.

Lord Forsyth of Drumlean: My Lords, does the Secretary of State know the identity of his very enthusiastic supporter who was responsible for the leak of the letter to the Guardian on Saturday and for the leak today of the policy announcement that he is going to give to the House later?

Lord Mandelson: No, my Lords.

Lord Dykes: My Lords, now that the Minister has said these encouraging words about the Post Office, does he agree that one should build on the advice of the noble Lord, Lord Faulkner, and persuade the BERR and Treasury mandarins to give up their obsession with meddling with the Post Office, leave it alone and let it operate as a commercial organisation, making at least a reasonable revenue profit, and get away from privatisation? This is the people's Post Office. Does he agree that now is the time to have a wholehearted reassurance package for the entire Post Office organisation?

Lord Mandelson: My Lords, I do not think that we are meddling. We are investing and assuring the future of the Post Office and the maintenance of its national network. The fact is that the Post Office is an established and trusted brand; it is not starting from scratch in the financial services sector. It therefore has a lot to build on, and we want to see how that can be done.

Business

Lord Bassam of Brighton: My Lords, after the consideration of Commons amendments to the Employment Bill, with the leave of the House my noble friend Lord McKenzie of Luton will repeat a Statement on the future of the Post Office card account.

Procedure Committee: Third Report

The report can be found at http://www.publications .parliament.uk/pa/ld200708/ldselect/ldprohse/186/186.pdf

Lord Brabazon of Tara: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the third report from the Select Committee (HL Paper 186) be agreed to.—(The Chairman ofCommittees.)
	On Question, Motion agreed to.

Children and Young Persons Bill [HL]

Baroness Morgan of Drefelin: My Lords, I beg to move that the Commons amendments be now considered.

Moved accordingly, and, on Question, Motion agreed to.
	commons amendments
	[The page and line references are to Bill 96 as first printed for the Commons.]
	Amendment No. 1
	Leave out Clause 7

Baroness Morgan of Drefelin: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1.
	I hope that with this amendment I can set the tone for today's considerations. I am sure noble Lords will have welcomed the Government's constructive response on this issue when the Bill passed to the other place. We have listened to the powerful and thoughtful arguments that noble Lords and others have put forward on whether those responsible for running the immigration system should have a legal duty to make arrangements to ensure that, consistent with their primary duty to secure our borders, their functions are discharged having regard to the need to safeguard and promote the welfare of children—in other words, a duty equivalent to that required of other public bodies and persons listed in Section 11 of the Children Act 2004.
	We agree that making the UK Border Agency subject to this duty is the right thing to do for children and young people, and now is the right time to do it. My right honourable friend the Minister for Children, Young People and Families, Beverly Hughes, committed to making the UK Border Agency subject to such a duty in Committee in the other place. However, rather than using this Bill, which will apply only to England and Wales as the legislative vehicle, we believe that the Immigration and Citizenship Bill is more appropriate. I know that I am not allowed to do this, but I have the draft Bill in my hand. In particular, it allows for a UK-wide solution which I know was the will of this House and will mean it can be appropriately scrutinised along with other immigration reforms.
	As noble Lords are aware, on 14 July 2008, the Home Secretary published a draft partial version of the Immigration and Citizenship Bill, which included in Part 11 Clause 189 on the duty regarding the welfare of children. I hope that noble Lords are reassured that it will have the same effect in relation to the UK Border Agency. The clause uses the same terminology by providing that arrangements must be made to ensure that,
	"any function of the Secretary of State in relation to immigration or nationality ... is discharged having regard to the need to safeguard and promote the welfare of children who are in the United Kingdom".
	The duty will also apply to designated officials when they are exercising immigration functions and to those contracted by UKBA to provide any services in relation to the discharge of relevant functions.
	Officials in my department continue to work extremely closely with those in the Home Office, and the draft clause will be refined further to ensure that there is a statutory power to issue guidance and a requirement in law to have regard to it. This ensures a complete read-across to the Children Act 2004 Section 11 duty, which also includes provision requiring those subject to the duty to have regard to guidance issued by the Secretary of State.
	The agreed intention between the Home Office and the Department for Children, Schools and Families is that the guidance planned to underpin the duty provided for in the Immigration and Citizenship Bill will be joint guidance, developed by both departments, and will build on the existing UKBA code of practice for keeping children safe from harm to provide a blueprint for effective safeguarding practice and the promotion of child welfare within the Immigration Service.
	I know that noble Lords share the Government's view that the effectiveness of the new planned duty can only ever be judged by the extent to which the cultural shift which has already begun within the Immigration Service continues and becomes embedded fully. Of course there will be new independent inspection arrangements to help monitor the changes we expect.
	I am confident that we have taken an important step forward, a step that is a testament to the powerful argument, expertise and experience of this House. I am also confident that the draft clause in the partial draft Immigration and Citizenship Bill, subject to further minor refinement, will, as I have described, provide the right degree of parity with agencies subject to the Section 11 duty in the Children Act. Given the progress I have highlighted today, I am sure that this House will support these amendments.
	Moved, That the House do agree with the Commons in their Amendment No. 1.—(Baroness Morgan of Drefelin.)

Baroness Morris of Bolton: My Lords, it seems a very long time since we last met to debate this Bill, and I intend to speak only once in considering all these Commons amendments. I am pleased that now the Bill has returned to us from another place, we are faced with a more robust piece of legislation. There has been genuine cross-party co-operation to get to this stage; we welcome that, because we all have a keen interest in the welfare of children. The more improvements we can make to that welfare, the better.
	We are, and not for the first time, dealing with some of the most vulnerable groups in society. The statistics and stories which we have all learnt since the Bill first arrived in your Lordships' House have assured us of that. It is therefore in everybody's interests that we have been able to make such progress.
	I am delighted that the Government have looked so favourably on placing a duty on the UK Border Agency to have regard to the need to safeguard and promote the welfare of children in the exercise of its functions. The phrase that I used on Report was,
	"protecting a child from harm is not the same as promoting his welfare".—[Official Report, 17/3/08; col. 31.]
	It is a testament to the enormous support received throughout your Lordships' House that the Government now agree.
	For the benefit of anyone who may have been confused by the amendment which came back from the other place, which seeks to remove the clause that your Lordships' House had added, I should state that I am delighted that the Government have thought seriously about this issue and am enormously grateful that they have decided that the measure would have more thorough application if an equivalent clause was inserted into the forthcoming Immigration and Citizenship Bill. For the sake of protecting vulnerable children, those provisions cannot arrive soon enough.
	Barnardo's has voiced a number of concerns, which the Minister has addressed. However, we share with it one concern: that the transition between the code of practice to safeguard children, to be issued under Section 21 of the UK Borders Act 2007, which will be laid before Parliament shortly and come into effect in the new year, must take into account the new stated policy intention of promoting children's welfare. There must be a seamless transition between the codes and the guidance for staff working on the ground.
	I said that the Bill has seen true cross-party co-operation. We on these Benches have been encouraged by the Government's constructive approach. We look forward to the outcome of the pilot social care practice schemes, and hope that positive findings will be acted on in due course. We of course welcome the greater support offered for disabled children and their parents, and the greater emphasis that is to be placed on family fostering and fostering closer to home.
	As the Minister said, we must do all we can to ensure that children do not enter the care system in the first place. We have taken important steps towards this goal in the Bill.
	I look on the progress that we have made with great pride. We have taken a good Bill and made it better. As I am stepping down as spokesperson for the Opposition on the children and families brief at the end of this parliamentary Session, I am delighted to end on such a happy note.

Baroness Walmsley: My Lords, I add my thanks to those expressed to the Minister and congratulate her on picking up this important issue and running with it in a way which is not the same as your Lordships had proposed but is perhaps even better. I congratulate the noble Baroness, Lady Morris of Bolton, because it was her amendment that led to your Lordships' House initially discussing this issue, to which the Government have listened so effectively. It is a great tribute to her work that she is able to step down from her portfolio—we regret that she is doing so—on such a high note. I thank her for all our cross-party work together during the years since she joined your Lordships' House.
	I share her concern about whether the new clause in the Immigration and Citizenship Bill should be equivalent to what your Lordships had done. The Minister has today reassured us on that matter, and did so in writing in her letter of 7 November, for which I thank her. She has also made it quite clear that her department will remain engaged with the Home Office on this issue throughout the process. I share the concern of the noble Baroness, Lady Morris, too, about the transition phase, but I am encouraged that the Minister's letter makes it clear that she will continue working with the Refugee Children's Consortium group of organisations. I am sure that keeping them closely engaged with the process will ensure that the Government make sure that the transition is as good as we could have wished. It is regrettable that it has been postponed, but let us hope that it will have been in a good cause.

Baroness Howarth of Breckland: My Lords, I, too, congratulate the Minister on what has come from the Commons. It is an excellent Bill. Those of us who spent great time on it could never have expected the outcome that we are hearing today. I am sure that we are all extraordinarily grateful to the Minister for pursuing the matter in the way that she has, because we have at last established the principle that all children within the borders of this country will be treated as children who can be safeguarded and whose development can be considered. However, will she say something about the training of the staff who will be dealing with this in the UK Border Agency, and how they will be absolutely clear about protecting children? I work in an organisation that spends a lot of time thinking about safeguarding, and we still have problems ensuring that every member of staff is clear about the issues.
	I add my congratulations to the noble Baroness, Lady Morris, on the Opposition Front Bench. She has made a huge contribution to children and families services and will be missed in that context—although, no doubt, she will make her contribution elsewhere.
	I look forward to the implementation of this legislation. I ask the Minister for reassurance about implementation timescales, because, having worked in this field for many years, I know that while we have lots of legislation, implementation is what really makes it count—and then the monitoring of how that implementation moves forward. I feel privileged to have worked on this Bill.

Lord Ramsbotham: My Lords, I add my thanks and congratulations to the Minister and say how welcome it was to hear her mention the close co-operation between the officials in her department and in the Home Office on this matter.
	We all congratulate the noble Baroness, Lady Morris, on the work she has done; we shall miss her leadership on discussion of the new Bill. Like her, I was slightly concerned when I saw the Commons amendment in its bare form, because of the time that it will inevitably take to introduce a new Bill. Time is my concern, because of the very large number of immigrant children who have disappeared beneath the radar.
	During the passage of the Bill, we discussed the possibility of local child protection agencies and others being made to conduct a census in their own area to try to discover how many such children there are, about whom we know nothing. They are not in the care of the social services or on any book. This must be wrong. So my one concern is that, during the period of working on the new Bill and taking it through, the momentum generated by this Bill should not be lost and the movement to conduct censuses of that kind should not be stopped until the new Bill has laid the duty on various authorities. Will the Minister comment on that?

Lord Elystan-Morgan: My Lords, I do not know whether the Minister remembers the proverb in Welsh, "Nid da lle ellir gwell", which means, "Nothing is good that can be improved upon". That is exactly what has happened with this Bill, which was a good, gallant and noble Bill when it first came to this House but has been greatly improved. I, too, join in congratulating the noble Baroness, Lady Morris of Bolton, on her sterling efforts in that connection.
	Without going into detail, I am very conscious that the improvements contained in these amendments show a greater sense of trusteeship and commitment on the part of the Government towards children in need. The reaction has been imaginative; the duty at every possible opportunity to seek out and identify need is at the heart, core and kernel of the answer to this problem. Whatever our efforts are, even our noblest efforts will fall short of the needs of these children, but a great deal of progress has been made and a great deal of further progress set in train by this amendment.

The Earl of Listowel: My Lords, on the specific matter of parity of treatment of children in the Immigration Service and other children in this country, I express my gratitude to noble Lords on the Front Benches for pushing so hard and consistently on this matter. I thank the Minister for the Government's helpful and encouraging response to those concerns, which I know they very much share.
	I encourage the Minister to meet Mr Oppenheim, the children's champion in the Immigration Service appointed by her predecessor, the noble Baroness, Lady Ashton of Upholland, to discuss these matters further if she has not yet had the opportunity to do so. The Children's Commissioner for England recently visited Yarl's Wood family detention centre, about which he continues to have concerns, so I hope that she will be able to make the time to meet Mr Oppenheim at an early juncture.
	I also join in welcoming the Bill. It has been a pleasure and a privilege to have been involved in some parts of it. I do so as the joint chair of the All-Party Group on Children and Young People in Care. It is a great step forward and shows the Government's commitment to improving the chances of these young people, who have been so regrettably let down in the past. Recent events highlight the continuing need, despite the welcome efforts made by the Government, to improve the status of social work and to support social workers. Far more still needs to be done to ensure that there is a proper professional framework in which social workers can operate in difficult circumstances and with such vulnerable children and families. I welcome the Bill.

Baroness Howe of Idlicote: My Lords, I congratulate the Minister and the Government generally on their considerable efforts to accommodate our very real concerns about the Bill. I am sad to hear that the noble Baroness, Lady Morris, is to leave this brief. As others have said, I am sure that there will be plenty of activity in many areas of the political scene and elsewhere to which she will apply her considerable knowledge and experience.
	I emphasise the concern that we all share about children in the immigration scene. I back the idea of continuing to keep an eye on the terrible problem of children who have disappeared out of sight since arriving in this country. Our lack of knowledge and activity during the time that that has been going on is shameful and we have not done as much as we could have done. I hope that the Minister will be active in that respect.

Baroness Morgan of Drefelin: My Lords, I thank noble Lords for those helpful and important contributions. As someone who has joined the proceedings on the Bill at the very last stage, I have been made aware of the incredibly rich, important and significant debates that have taken place. I should like to offer a little more reassurance on the questions that noble Lords have raised. First, the noble Lord, Lord Ramsbotham, highlighted the question of momentum. The Bill has certainly generated momentum and we will be moving quickly onto the next Bill. But I am happy to reassure him and other noble Lords that we will continue the momentum that this Bill has generated.
	I can also reassure noble Lords about the code of practice. I know that some noble Lords have been concerned that there will be a considerable gap in time before the new duty in the Immigration and Citizenship Bill can take effect. I am therefore pleased that the arrangements provided for in the UK Borders Act 2007 requiring the Border and Immigration Agency, as it was then known, to have regard to a code of practice for keeping children safe from harm will remain in place. It will have been reinforced by the clear new direction of travel.
	The code of practice has been consulted on widely and a response to that consultation, together with a revised code, is expected to be published in early December, when the original duty in the UK Borders Act 2007 will be commenced. In time, the planned provisions in the Immigration and Citizenship Bill will replace those in the UK Borders Act 2007, so we can expect a phased introduction of these new measures designed to safeguard children and promote their welfare: first, from this autumn, a duty on UKBA to have regard to a code of practice for keeping children safe from harm; and then, subject to the passage of the Immigration and Citizenship Bill, a stronger duty to discharge functions having regard to the need to safeguard children and, picking up on the concern of the noble Baroness, Lady Morris, to promote their welfare, and to have regard to guidance issued by the Secretary of State.
	The noble Baroness, Lady Howarth, referred to training. All border and immigration staff have received training on child awareness issues to keep children safe from harm, with two further levels of training aimed at those staff members whose work directly affects children. The UKBA's culture is changing and, given what I have said today, there should be no question of our commitment to ensuring that culture change continues.
	The noble Earl, Lord Listowel, asked whether I would be happy to meet Jeremy Oppenheim, the children's champion for the UKBA. I have had a note from my officials to say that I shall be happy to do so. I thank them for that kind gesture, but I could have thought that out for myself. I shall be delighted to meet Jeremy Oppenheim and shall treat that as an urgent matter.
	Like all noble Lords who have taken part in this short debate, I wish to put on record my thanks to the noble Baroness, Lady Morris of Bolton. She and I are members of the class of 2004. She has made a tremendous contribution to this House. I am disappointed that I will not be able to work with her more often as we take forward the huge amount of legislation that will be introduced in the next Session. I hope that noble Lords will accept my commitment from the Dispatch Box to maintain the momentum that we need to ensure that we keep the interests of all children within the UK borders at the centre of our approach.

On Question, Motion agreed to.
	AMENDMENTS NOS. 2 AND 3
	Page 8, line 34, at end insert—
	"( )
	Until the coming into force of subsection (1), Schedule 2 to the 1989 Act has effect with the modifications specified in Schedule (Transitory modifications of Schedule 2 to the 1989 Act)."
	Page 12, line 8, leave out "this section" and insert "section 12 or 13"

Baroness Morgan of Drefelin: My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments Nos. 2 and 3.
	This is a small group of minor and technical amendments. I shall try to explain succinctly their effect and rationale. Commons Amendment No. 2, and its counterpart Commons Amendment No. 9, although lengthy, are in fact minor and technical, concerned with the establishment of an independent review mechanism relating to approval of foster parents, similar to the existing mechanism for prospective adopters. By restating paragraphs 12(d) and (g) of Schedule 2 to the Children Act 1989, the amendments provide for transitory arrangements in advance of the new substantive provisions coming into force.
	The Bill already contains provisions in Schedule 1 that enable the Secretary of State in England, or the Welsh Ministers in Wales, to make regulations to set up an independent review mechanism for foster carers. The independent review mechanism will allow all prospective and existing foster carers whom the fostering service provider proposes not to approve as foster parents, or whose approval the provider proposes to withdraw, the option of having their case reviewed by an independent panel. So it is offering those who may not go forward as foster parents the option to have that decision reviewed. Our intention is to establish the new IRM for foster parents from April 2009, but the enabling provisions in Schedule 1 are linked to Clause 9 and to the restatement of Section 23 of the Children Act 1989, and our timescale for bringing those provisions into force is longer. This is why we need a separate, parallel transitory provision to enable the fostering IRM to be established next April.
	Commons Amendment No. 7 amends Clause 32, which provides the Registrar General with a power to supply child death information to the appropriate national authority for research purposes. This amendment makes it clear that the power to share information is not limited to information about the particular circumstances of the death and would include, for instance, information about where the child had been living.
	Finally, Commons Amendment No. 3 is a minor drafting change to Clause 14, to ensure that subsection (2) correctly cross-refers to an order made under Clauses 12 and 13. I hope that, given that brief explanation, noble Lords will accept this group of amendments.

Baroness Walmsley: My Lords, I shall just say a few words about Commons Amendment No. 7, which I particularly welcome, as I welcome any means of ensuring that we gain the widest possible dissemination of information about child deaths and therefore have every possible opportunity to learn lessons from every child death.
	It is unfortunate that, despite everything that the Government have done, we are still having too many violent deaths of children; even one is too many. It is very important that we should have every possible opportunity to learn lessons from the deaths of children. I refer not just to the terrible recent case in Haringey, but to the two more child deaths in Manchester, of which I heard only this morning. I have no doubt that lessons will emerge from that case too. It is important that professionals everywhere have every single opportunity to learn all the lessons that they can from all those unfortunate occurrences.

On Question, Motion agreed to.
	Amendments Nos. 4 to 6
	Page 14, line 25, leave out "(4)" and insert "(4A)"
	Page 14, line 38, at end insert—
	"(4A)
	After that subsection add—
	"(5) For the purposes of subsection (4)(b), if the child is not in the area of the local authority, they must treat him as if he were in that area.""
	Insert the following new Clause—
	"Support for accommodated children
	After paragraph 8 of Schedule 2 to the 1989 Act insert—
	( 2 )
	"Provision for accommodated children
	8A (1) Every local authority shall make provision for such services as they consider appropriate to be available with respect to accommodated children.
	(2) "Accommodated children" are those children in respect of whose accommodation the local authority have been notified under section 85 or 86.
	(3) The services shall be provided with a view to promoting contact between each accommodated child and that child's family.
	(4) The services may, in particular, include—
	(a) advice, guidance and counselling;(b) services necessary to enable the child to visit, or to be visited by, members of the family;(c) assistance to enable the child and members of the family to have a holiday together.
	(5) Nothing in this paragraph affects the duty imposed by paragraph 10.""

Baroness Morgan of Drefelin: My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments Nos. 4 to 6.
	This group of amendments relates to children who are provided with accommodation for three months or more under education and health legislation, the great majority of whom are disabled. The particular needs of this vulnerable group have been the subject of much debate, both in this House and the other place. Perhaps it is no surprise, then, that we have returned to this topic.
	We have made it clear throughout the debates on this issue that we share the ambition to ensure that social services are actively involved in a timely and appropriate manner when a decision is taken to accommodate a child away from home, so that consideration is given in every case to the child's social care needs and to the needs of members of his or her family for support, to enable them to sustain their involvement in their child's life.
	Having listened carefully to the persuasive and passionate speeches on this subject, my honourable friend, and my predecessor as Parliamentary Under-Secretary of State for Children, Young People and Families, Kevin Barron, undertook to explore with the Every Disabled Child Matters campaign group whether there was anything more that the Government could do to promote the welfare of this vulnerable group of children. I believe that we have developed a package of primary and secondary legislation, supported by improved statutory guidance, which will make a significant contribution to improving services for these children.
	Commons Amendment No. 6 requires the local authority to have an appropriate tailored package of services suitable to meet the needs of children who are provided with accommodation under health or education legislation. In particular, the local authority will be expected to provide services that support the continuing active involvement of the parents in their child's life. It will complement the new duty in Clause 19 of the Bill to arrange social work visits which will provide ongoing supervision for the placement and ensure that the local authority is aware of any significant change in the child's circumstances and is able to step in where necessary.
	I hope that one of the most important services that local authorities can provide is to take all reasonable steps to promote contact between the parent and child. The amendment specifically refers to services,
	"necessary to enable the child to visit, or to be visited by, members of the family",
	and to,
	"assistance to enable the child and members of the family to have a holiday together".
	We already expect agencies to work together when making long-term plans to accommodate children away from home.
	Nevertheless, we recognise that in some cases interagency working arrangements are not as effective as they should be, and so we will use powers in Clause 19 to require a visit to take place within the first seven working days of a placement, or notification of a placement, unless an initial social services assessment has already been carried out as part of the placement decision. This will provide reassurance for parents and children that children's social care professionals will be involved from the start of the placement.
	It remains the responsibility of the home local authorities to assess and provide services to meet the needs of children being placed out of area under health or education legislation. Commons Amendment No. 5 makes this position clear beyond doubt. Of course, in practice, it will often be appropriate for the home and receiving local authorities to reach an arrangement for some aspects of service provision.
	I recognise that, unfortunately, for many children in long-term placements parental engagement may be difficult to establish or sustain, and we will strengthen statutory guidance to make clear that one of the visitor's responsibilities will be to develop a relationship with the child and provide support to their parents. For that reason, the visitor should be available to speak with the parents and the child between visits. The guidance will also provide greater detail on the considerations around parental involvement and the child's needs, and when it would be appropriate for the local authority to assume responsibility for providing accommodation under Section 20 of the 1989 Act, and thus for the child to become looked after.
	This is a comprehensive package of measures that was developed in partnership with Every Disabled Child Matters and has been warmly welcomed by it. The package significantly improves the safeguards for this group of vulnerable children and will promote their welfare by providing support to keep the child and family in touch. I am committed to continuing the constructive dialogue with EDCM, other stakeholders and honourable Members. This will be vital in taking forward the development of the regulations and statutory guidance. I am confident that noble Lords will support this improvement to the Bill.
	Moved, That the House do agree with the Commons in their Amendments Nos. 4 to 6.—(Baroness Morgan of Drefelin.)

Baroness Walmsley: My Lords, I hope that I speak for the whole House when I congratulate the Government on listening to the Every Disabled Child Matters consortium, which is very much to be congratulated on its role in helping the Government make even further improvements to what was a very good Bill. I also congratulate, in his absence, the noble Lord, Lord Rix, for his persistence, in this House and behind the scenes, in letting the Government have the benefit of his great expertise in this field.

The Earl of Listowel: My Lords, I join the noble Baroness in welcoming these improvements to the Bill. The concern raised with me by a director of social services was that in this area it is very important to get the balance right between a local authority's responsibilities and those of parents. It is also important for the local authority to measure its response so that it does not lessen the parents' involvement. Therefore, I was very pleased to hear what the Minister said about all the steps taken to promote contact between the child and any family that he may have, and I welcome the amendment.

Lord Ramsbotham: My Lords, while we are in the mood of thanking and congratulating those who played a part in the Bill, I hope that the House will not think it inappropriate if I mention the noble Lord, Lord Adonis, the Minister's predecessor. We thank him for all the work that he did during the passage of the Bill.

Baroness Howe of Idlicote: My Lords, I add my voice to those of other noble Lords in expressing thanks because a considerable amount of effort has gone into the Bill from all sides. This is a hugely important amendment and it has been worked on to an impressive degree, particularly the important aspect of keeping the family in touch in many ways. That is spelt out in exactly the way one would hope and we wish the provision well in its implementation.

On Question, Motion agreed to.
	COMMONS Amendment No. 7

Baroness Morgan of Drefelin: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 7.

Moved accordingly, and, on Question, Motion agreed to.
	COMMONS Amendment No. 8

Baroness Morgan of Drefelin: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 8. This is the privilege amendment.

Moved accordingly, and, on Question, Motion agreed to.
	COMMONS Amendment No. 9

Baroness Morgan of Drefelin: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 9.

Moved accordingly, and, on Question, Motion agreed to.

Employment Bill [HL]

Lord Brett: My Lords, I beg to move that the Commons amendments be now considered.

Moved accordingly, and, on Question, Motion agreed to.
	commons amendments
	[The page and line references are to Bill 117 as first printed for the Commons.]
	COMMONS Amendment No. 1
	Page 4, line 3, after "Society)" insert—
	"Regulation 17 of the Cross-border Railway Services (Working Time) Regulations 2008 (SI 2008/1660) (breach of regulations)"

Lord Brett: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. This is a consequential technical amendment to Clause 3. Clause 3 allows employment tribunals to increase or decrease an award by up to 25 per cent for unreasonable failure to comply with any relevant code of practice relating to workplace dispute resolution. Tribunals will be able to adjust awards under the jurisdictions set out in new Schedule A2. This schedule replicates the jurisdictions that are already listed in Schedule 3 to the Employment Act 2002. It covers the vast majority of the jurisdictions of claims accepted by employment tribunals.
	Following the Third Reading of the Bill in this House, the Cross-border Railway Services (Working Time) Regulations 2008 came into force on 27 July. These regulations transpose a European directive on working conditions for railway workers on cross-border railway services and replace conditions previously covered by the working time directive.
	Regulation 17 allows a worker to complain to an employment tribunal if his employer has refused to permit him to exercise rights under the regulations relating to rest or break periods. The regulations insert Regulation 17 into Schedule 3 to the Employment Act 2002 as a jurisdiction to which the adjustment of awards for non-completion of statutory procedure applies. Amendment No. 2 therefore makes a consequential amendment to add Regulation 17 to new Schedule A2 as a jurisdiction to which the new adjustment provisions will also apply after repeal of the existing provisions.
	Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord Brett.)

On Question, Motion agreed to.
	COMMONS Amendment No. 2
	Insert the following new Clause—
	"Employment agencies and national minimum wage legislation: information-sharing
	(1) In the National Minimum Wage Act 1998 (c. 39), in section 15 (information obtained by officers), after subsection (5) there is inserted—
	"(5A) Information to which this section applies—
	(a) may be supplied by, or with the authorisation of, the Secretary of State to an officer acting for the purposes of the Employment Agencies Act 1973 for any purpose relating to that Act; and(b) may be used by an officer acting for the purposes of that Act for any purpose relating to that Act."
	(2) In the Employment Agencies Act 1973 (c. 35), in section 9 (inspection), subsection (4) is amended as follows—
	(a) after "this section" there is inserted "(or pursuant to section 15(5A) of the National Minimum Wage Act 1998)";(b) after paragraph (iv) there is inserted "or (v) to an officer acting for the purposes of the National Minimum Wage Act 1998 for any purpose relating to that Act;"."

Lord Carter of Barnes: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 2. I shall also speak to Amendment No. 4.
	Amendment No. 2 addresses an issue raised in the Vulnerable Worker Enforcement Forum's report, which was published together with the Government's response in August. Once the Employment Agency Standards Inspectorate has started an inspection, it is currently a criminal offence to disclose information obtained during that inspection. Inspectors therefore cannot inform Her Majesty's Revenue and Customs, which enforces the national minimum wage, if they come across indicators of non-compliance with the minimum wage. This legal restriction on minimum wage officers being able to share information also means that they are not able to inform employment agency inspectors of details of non-compliant employers in order for inspectors to follow up possible non-compliance issues with the employment agency legislation.
	Amendment No. 2 would remove these barriers to information sharing between those who enforce the national minimum wage and those who enforce employment agency legislation. Amendment No. 4 provides for Amendment No. 2 to be commenced by order.
	Moved, That the House do agree with the Commons in their Amendment No. 2.—(Lord Carter of Barnes.)

Lord Cotter: My Lords, I should like to take this opportunity to refer to the national minimum wage, an issue covered by Amendment No. 2 and also by the Employment Bill. For my sins, I participated in the National Minimum Wage Bill in the other place, where we had one of the longest Committee sittings ever—over 24 hours—to discuss it at great length. It is good that the issue has been addressed again in the Employment Bill, and vital that compliance is achieved, as many of us will know from our contact with small businesses and those working in them. Usually we would be concerned about information being passed from one hand to the other, but on this occasion, in view of the great need to ensure that we tighten up on all the possible avenues for things to go wrong, we on these Benches support what has been put forward.
	I wonder whether this could not be classified as a way of tracking down people. In that connection, were we in a different place, we might be wishing to track down Joe the Plumber, a case which has recently received a lot of publicity. I am not sure whether Joe was a mythical figure, but I welcome the fact that we will be able, through these means, to contact those not implementing the regulations as required. I urge the Government to pursue this matter and to continue to keep their eye on the implementation of the national minimum wage.

Lord Carter of Barnes: My Lords, I thank the noble Lord for his support of the national minimum wage. If I understood the gentle subtext of his point, he had an understandable nervousness, justifiable in my view, about extending data sharing from one place to another. As he rightly pointed out, however, the objective is worthy, and he should be reassured that the safeguards are appropriate.
	As the noble Lord will know, I am but a novice in this House, as the saying goes; but I do not believe that our jurisdiction extends yet to the United States of America, which is where I believe Joe the Plumber was last spotted. But the noble Lord is absolutely right to point out that the purpose of this legislation is to ensure greater compliance with the national minimum wage and to make the enforcement of compliance easier to achieve. I welcome his support.

On Question, Motion agreed to.
	COMMONS Amendment No. 3
	: Page 18, line 16, leave out from beginning to second "on" in line 17.

Lord Carter of Barnes: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 3. This is a purely technical amendment. Under the commencement provisions in Clause 21, the provisions in Clauses 15 to 17 relating to employment agencies come into force either on 1 October 2008 or, if the Act obtains Royal Assent after that date, on 6 April 2009. As we are now discussing the Bill on 13 November 2008, the option to commence these clauses on 1 October can no longer be exercised. Amendment No. 3 therefore removes the option from the Bill.

On Question, Motion agreed to.
	COMMONS Amendment No. 4

Lord Carter of Barnes: I beg to move that the House do agree with the Commons in their Amendment No. 4, to which I have spoken with Amendment No. 2.

Moved accordingly, and, on Question, Motion agreed to.
	COMMONS Amendment No. 5
	: Page 18, line 27, leave out subsection (2)

Lord Carter of Barnes: I beg to move that the House do agree with the Commons in their Amendment No. 5. This is the privilege amendment; noble Lords will forgive me if I rehearse the standard phrase. This amendment will remove the privilege amendment that was made when the Bill moved to another place. As noble Lords will be aware, the financial powers are restricted by the rights and privileges of the other place. As the Bill originated here and contains financial provisions, a privilege amendment was added to the Bill before its introduction into the other place to ensure that the financial privilege was not infringed. The amendment is purely technical and is necessary to remove the privilege amendment, which provided that nothing in the Bill should impose or vary any charge on the people or public funds.

On Question, Motion agreed to.

Lord Brett: My Lords, I beg to move that the House do now adjourn for five minutes.

Moved accordingly, and, on Question, Motion agreed to.
	[The Sitting was suspended from 12.28 to 12.33 pm.]

Post Office Card Account

Lord McKenzie of Luton: My Lords, with the leave of the House, I shall repeat a Statement made by my right honourable friend, James Purnell, in the other place. The Statement is as follows:
	"With permission, Mr Speaker, I shall make a Statement on the future of the Post Office card account.
	"This Government created the Post Office card account in 2003. We announced that there would be a successor in 2006 and, based on the legal advice we received at the time, we put the contract out to tender. During that process, I have been unable to comment publicly or privately on this matter. I know that that has been frustrating to honourable Members, and I thank them for their understanding.
	"I know that all honourable Members would agree that the post office is at the heart of their community. It reaches the places and people that no one else does. That is why the Government have invested £2 billion in the Post Office since 1997; that is why we have for the first time set out access criteria to guarantee its reach; and that is why we will invest another £1.7 billion between now and 2011.
	"There is no doubt that the Post Office card account is central to maintaining a viable post office network. It not only generates a key part of the Post Office's income but brings with it vital footfall to individual sub-postmasters. Post Office card account customers have shown how much they value the service through the postcard campaign over the past few months, which has resulted in the large postbags of honourable Members.
	"It is also clear that maintaining a viable post office network is even more critical now than it was two years ago. The financial turbulence that began with the American banks, and the string of consequences which followed from it, have understandably made many people, particularly the most vulnerable in our society, more concerned about financial transactions. The Post Office, with its trusted brand, is seen as a safe, secure and reliable provider of services.
	"Now cannot be the time for the Government to do anything that would put the network at risk, particularly as post offices are often the only providers of banking services in both rural and deprived urban areas. The Post Office also has a proven track record of being able to move billions of pounds in cash safely around the country to ensure that the money is there when customers need it, and prides itself on meeting the needs of vulnerable customers. Sub-postmasters know their customers and provide a social service as well as a banking service.
	"Delivering that vital social service for groups in our communities who need it most is not only an objective of the Post Office. It is an objective shared passionately by the Government as well.
	"To safeguard that service, we must help and support a viable post office network. For that reason, I can announce today that the Government have now decided to cancel the current unfinished procurement exercise and to award a new contract for the continuation of the Post Office card account directly to Post Office Ltd, within the terms of the relevant EC regulations. The contract will run initially from April 2010 to March 2015 with the possibility of an extension beyond that.
	"I recognise, of course, that this decision will disappoint those other bidders who had reached the final stage of the competition. I emphasise to the House, as I have done personally to the companies in question, that my decision does not reflect in any way on their ability to have provided the services in question. Nor is that a step that we have taken lightly. We recognise the importance of competition in the awarding of public contracts, but we have concluded that, in the current circumstances, protecting vulnerable groups by preserving a viable post office network justifies the award of a contract outside the competitive process. These are exceptional times, and we believe that this is a proper and proportionate response.
	"The Post Office considers that this decision, along with the extra money invested by the Government, will ensure a commercially viable future for the post offices that will be in place after the modernisation programme is complete.
	"I said that I would make a decision as soon as I could. I said that I would not rush the decision. I said that what was important was that we made the right decision. I believe that this is the right decision. This decision is good news for our constituents; it is good news for Post Office Ltd; and it is good news for sub-postmasters. I trust that it will be welcomed by honourable Members and I commend the Statement to the House".
	My Lords, that concludes the Statement.

Lord Skelmersdale: My Lords, I am grateful to the Minister for repeating this long overdue Statement made in another place literally seconds ago. He must be aware that it contains a fiasco with a happy ending. It has been awaited for a very long time. We were told by the Government that it would come before the Summer Recess. The Summer Recess came and went. Then we were told that it would come in October. October came and went. Then we were told that it had been held up by the Glenrothes by-election. That came and went. Now, at last, we have it.
	It comes as a great relief to post offices and to the many people—in particular, pensioners—whom they serve. Five thousand post offices have already gone since the Government started dithering on the matter. If the Post Office card account had not been re-awarded to post offices, there is no doubt that that would have led to an even greater number of closures. Indeed, we heard during Questions today of an estimate of one-third of post offices being lost by the time of the next election, had this happy event not occurred. So why does the Statement say:
	"There is no doubt that the Post Office card account is central to maintaining a viable Post Office network"?
	What led the Government, kicking and screaming perhaps, to reach this conclusion—a conclusion which the public and their MPs have been telling them for months? We have even had debates in your Lordships' House, led not least by my noble friend Lady Byford on this exact subject.
	The Statement appears to blame this fiasco on lawyers. I suppose the Government have to blame someone when considering the future of the Post Office card account. Lawyers apparently said that it would have to go out to tender. This is indeed what happened. However, the Statement says that,
	"the Government have now decided to cancel the current unfinished procurement exercise".
	Have the same government lawyers pronounced on that? If so, this advice is not really consistent.
	The announcement today is not permanent relief for post offices or their millions of customers. It amounts to an extension of the current arrangements for, in the first instance anyway, only five years. Did the lawyers advise on this, too? What is the significance of "the relevant EC regulations" in the Statement? Where do they fit into all this? How much has all this abortive tendering exercise cost?
	Finally, DBERR is at last grappling with the undoubted problems of the Post Office, and I congratulate the Secretary of State, who I am afraid is absent. I rather see his hand in much of the Statement, such as the bit about the Post Office's potential role in becoming even more involved with financial products, because the Post Office is seen as what the Statement quite rightly calls,
	"a safe, secure and reliable provider of services".
	That remark stands out.
	Exactly those thoughts were in a letter from the Secretary of State to the Prime Minister, which was leaked to the Guardian on Tuesday. I do not know whether the Minister heard the maiden speech of the noble Lord, Lord Mandelson, the other day, but he was here,
	"to toil, not to spin".—[Official Report, 16/10/08; col. 861.]
	We all thought that at the very least he would have remained in the House this morning either to give or to hear the Government's Statement, given his new-found great interest in the future of the Post Office. Had he been at the Dispatch Box this morning, I, or perhaps my noble friend who is his opposite number, would have asked him whether he would institute a leak inquiry. I therefore ask the Minister whether there will be one.
	In the past two years, the Government's handling of the Post Office has undermined its business and has caused painful turmoil and growing pain for postmasters and communities. Post offices, communities and many of the country's most needy people will today breathe a sigh of relief that the Post Office card account has been re-awarded to the Post Office.

Lord Graham of Edmonton: My Lords, be cheerful.

Lord Skelmersdale: My Lords, I am more than cheerful, I am delirious, but I am sorry that it has taken so long for this happy result to occur.

Baroness Thomas of Winchester: My Lords, we on these Benches also welcome this news. This is the week for memories of 11th hours. This decision seems to be another. Post offices, as noble Lords will know, have been closing all around the country and have been the subject of the most terrific campaigns by those on our Benches and the opposition Benches. It would have been disastrous for more post offices to close, particularly in this climate, and we are very pleased that the Government have understood this. We therefore welcome this decision, although it is very late in the day.
	We all want to know whether this is a permanent change or whether we will have to come back to the House to see what is going to happen in a few years' time. I will not reiterate the points that the noble Lord, Lord Skelmersdale, has made, but I want to ask about the bidding process. Are the Government going to compensate bidders for the costs that have been incurred so far? We need to know. Will the Government take any other steps to ensure the viability of the Post Office network, which is so important to its future? All in all, this is a very happy day, so I thank the Minister for repeating the Statement.

Lord McKenzie of Luton: My Lords, I am grateful for the support of both noble Lords who have spoken. I should say to the noble Lord, Lord Skelmersdale, that this not a fiasco at all; it is about taking the right decision at the right time, particularly given the turbulent financial circumstances that we face. It is bizarre to suggest that we somehow deferred this decision until after the Glenrothes by-election. We were able to win it without this good news. Goodness knows what we would have done if we had announced this earlier.
	The noble Lord said that we blamed this all on lawyers. That is not so. As the Secretary of State has made clear, being able to call a halt to the procurement process was key, and it was the advice of lawyers in the current circumstances to proceed without a competitive process. The previous advice, which was clearly based on the circumstances at the time, was that we needed to go out to competitive tender, which we did. The Secretary of State again requested advice, given the turbulence that we face and the importance of the Post Office brand and the stability that it is seen as providing in communities up and down the country. The advice came back that we did not, in these circumstances, have to proceed by competitive tender, which is why we have been able to take this decision. Tendering is obviously subject to EC regulation, but no requirements are imposed on us with regard to state aid under those provisions.
	The noble Lord also asked about cost in all this. All the bidders who were left in the competition made proposals that were below current terms, and clearly the end result will mean a better deal for the taxpayer.
	The noble Lord challenged the absence of my noble friend Lord Mandelson. I was not present when he answered a Question today about the future of the Post Office, but I did watch him on the screen and he seemed to be very clear about his and DBERR's commitment to a viable and sustainable Post Office and to ensuring all that can be done to develop financial services in particular through that substantial outlet. The noble Lord, Lord Hunt, challenged him on that, so to criticise my noble friend for not being here today is entirely unfair.
	I have no idea who leaked what to the press. It is not how I do business, but regrettably these things happen in a number of instances.
	This is a happy day for the noble Baroness, Lady Thomas of Winchester, and I am really pleased about that. She asked whether this was a permanent change. We have made it clear that the award is a contract to 2015, with the possibility of renewal. She also asked whether we will compensate bidders for their costs. We are certainly prepared to entertain reasonable claims for costs for bidders who remained in the final process. This will add to the viability of the Post Office network. At Question Time today, my noble friend Lord Mandelson explained his focus on this and his determination that the Post Office should be sustainable and viable for the future.

Lord Skelmersdale: My Lords, I think the Minister said in one of his responses to me that the lawyers were originally consulted in the circumstances pertaining at the time. Can he go a little further and tell us in what respect the circumstances have changed?

Lord McKenzie of Luton: My Lords, the noble Lord will know full well that it is the convention of the House not to disclose the processes by which legal advice is sought on behalf of the Government or the detail of that. The point to bear in mind is that we are in turbulent financial circumstances in which particularly vulnerable people question the use of bank accounts or accounts of any sort, and whether they should have faith in the financial system. Given the strong brand that the Post Office has, it seems to be increasingly important that we do everything we can to make sure that its viability is sustained. It will be an added opportunity to encourage people into bank accounts, quasi-bank accounts and accounts such as the Post Office card system, which is different from where we were a couple of years ago. That fundamental backdrop and focus on the overriding public policy issue has generated this change.

Lord Faulkner of Worcester: My Lords, I assure my noble friend that we on these Benches at least are more than happy for him to make the Statement. We are aware that the Statement in the other place was made by the Secretary of State for Work and Pensions, and it seems very fitting that my noble friend should be here, particularly since his noble friend and mine answered my Oral Question little more than one hour ago. Perhaps the noble Lord, Lord Skelmersdale, did not hear that exchange, but he could have spoken to his noble friend Lord Hunt who asked my noble friend Lord Mandelson a number of the questions which he raised a few moments ago.
	Without going over the ground that we covered earlier, first, now that the Government have saved the Post Office card account, will they give urgent attention to looking at other ways in which the Post Office can play a greater part in the lives of the people of this country with the people's bank and offer other services at branches? Secondly, is it not also sensible for them to look at the future of the Royal Mail and ensure that its activities are not cherry-picked by competitors, and that as part of the new approach towards the Post Office a lot of the Royal Mail services are protected as well?

Lord McKenzie of Luton: My Lords, my noble friend will understand that these questions come more directly under the responsibility of BERR rather than the DWP. I believe that my noble friend Lord Mandelson was very clear on that first point at Question Time today in response to my noble friend's questioning. Issues around the Royal Mail are subject to review at the present time. I think that we share a desire to make sure that the Post Office and the Royal Mail are sustained in a robust form.

Baroness Byford: My Lords, since 2000 several Members in the Chamber today have sought to establish the future of post offices. It is a common drive, which I first raised during the passage of the Pensions Bill. The noble Baroness, Lady Hollis, is nodding. I have two direct questions. Will this announcement require the Post Office to look at those post offices whose future has already been put under jeopardy and will they be reviewed again? In his response earlier, the noble Lord, Lord Mandelson, said that he will talk to various government departments about ways in which they could get more trade going through post offices. Will the Minister particularly pay attention—the noble Baroness, Lady Hollis, will not agree—to the way in which the DWP does business? Clearly, the pensions and benefits department put enormous pressure on anyone who is entitled to a benefit to have it paid through their bank if they have one. That is not fair to post offices. I hope that the Minister will say that that practice will not continue.

Lord McKenzie of Luton: My Lords, perhaps I may deal with that second point first. Although I think that it was an omission the first time around, in leaflets now being prepared to notify people who are paid by cheque or giro about the alternatives to bank accounts, the Post Office card account has been added to that list of facilities which people are encouraged to use. The statistics are that, of the payments made by the DWP, something like 78 per cent are made into more mainstream bank accounts, 20 per cent into POCA accounts and 2 per cent are still made by giro. Under these new contractual arrangements, there are improvements to the Post Office card account. Card account holders can access their accounts through ATMs and the opening of such accounts will be more streamlined. That has been a bit bureaucratic and has deterred people. People will also be able to have the benefit of the fast-track payment system that is part of the financial services system.
	The noble Baroness asked me about the current closure programme. We do not believe that there will be an impact on that. Decisions on the last of the 42 area plans in the network change programme were announced on 29 October. If that decision had been made earlier, would more post offices have been able to stay open? We believe that the answer is no. Post Office Ltd has been making unsustainable losses and lost £500,000 a day last year. The network change programme reflected the need to restructure the network to reflect changing customer demands and habits. The programme has improved the viability of remaining offices through migration of customers from nearby offices which have closed.

Lord Cotter: My Lords, the Minister rightly referred to the turbulence in the banking sector, and the solid and reliable service that post offices give in this country, which is why we welcome the announcement today. But I should like to press the point made by my noble friend that this solution for the five-year period will develop into a permanent solution. In response to the question asked by the noble Baroness, the Minister seemed to imply that the closure programme would carry on even had this agreement been instituted before today. That makes me very worried that the Government are not committed to a permanent answer for post office services as more businesses depend on the local post office for their transactions. An experiment was carried out which delivered services of one sort or another—it could extend to the services for small businesses—through the post office system, and it was abandoned. We are looking for a permanent solution.

Lord McKenzie of Luton: My Lords, we should recognise that many sub-post offices are small businesses in their own right. I do not think that I could put it more eloquently than my noble friend Lord Mandelson did at Question Time on the Government's determination to build and sustain a viable network for Post Office Ltd. The noble Lord asked again about the term of the award of the contract. It is a five-year contract. The current contract ends in 2010, but with the prospect of renewal thereafter. That does not seem to be an unreasonable length of time for a contract and would give some assurance to Post Office Ltd.

Baroness Hollis of Heigham: My Lords, like everyone else, I am delighted, for social grounds, particularly in rural areas, that we are going to sustain the post office network. I hope, as I am sure that other noble Lords will do, that, as a result, sub-postmasters take the opportunity to build their businesses to ensure that they are used. A sizeable chunk of the post offices that closed in the past year had fewer than 20 transactions a week. Consequently, if we do not use post offices and if they cannot or do not provide the services that we all want to see, they will not survive and enjoy the footfall rightly referred to by my noble friend.
	I was concerned when the noble Baroness seemed to suggest that it was the DWP's responsibility to pay over the odds, if necessary, for transactions in order to keep afloat an institution which we all want to see stay afloat for social grounds. Perhaps my noble friend would remind the House of the cost per transaction of a DWP benefit payment, whether it be a pension or whatever, into a bank account, via POCA and a paper transaction. Perhaps he could give us a steer as to the relative costs, which used to be very alarming.

Lord McKenzie of Luton: My Lords, I am afraid that I cannot give my noble friend the specific detail, but I shall write to her. It is right that the comparative cost of paying people by cheque or giro is significantly greater than doing so through bank accounts and the Post Office card account. As I indicated, all the bidders in the final stage came forward with terms that were, in a sense, more favourable than the current arrangements, although obviously those are contractual terms between DWP and Post Office Ltd. How those terms translate into the cost of individual transactions is not something I can respond to specifically at the moment, but I will follow up the point and give my answer in writing. What is absolutely clear is that encouraging people to be paid by means other than through the giro system is safer, more secure, more flexible and generally better for them and considerably cheaper for DWP and HMRC.

Lord Eden of Winton: My Lords, first I should declare a long-out-of-date interest as a former Minister of posts and telecommunications. The Statement refers to the completion of the modernisation programme. Can the Minister assure the House that the Post Office has now secured more sensible manning and handling practices by the unions concerned? Will he also confirm that this Statement, welcome as it is, means that the plans that had been in existence for the closure of sub-post offices will no longer go ahead?

Lord McKenzie of Luton: My Lords, I cannot give an assurance on the latter point. I have made it clear in my previous two answers that this announcement does not affect the change programme that has been under way and is now heading towards a conclusion. We certainly believe that if the announcement had been other than that which I have been able to make today, there could have been a further impact on the network, but it will not change the restructuring proposals that are in place. They have been consulted and deliberated on over a considerable period of time.
	On what the announcement means for the Post Office in the future, my Statement included a welcome from Post Office Ltd and an acknowledgment that together with the other government funding that has gone in, another £1.7 billion between now and 2011, a considerable difference is being made to the continuing viability of Post Office Ltd.

Lord Clarke of Hampstead: My Lords, I forgot to declare my usual interest as a former postman when I spoke earlier during the Question put by my noble friend Lord Faulkner of Worcester.
	I welcome the Government's decision today—indeed, it would be churlish not to do so—but at the same time I draw attention to the fact that over the past six years a number of noble Lords on all sides of the House have been trying to guide the Government into understanding the need for a public service. Today we have seen, perhaps rather belatedly, the Government coming to the same conclusion. I am tempted to respond to an earlier comment about cherry picking, but that is for another day. The prophecies made on both sides of the House have all come true: we have seen the Post Office slip down and down and, of course, the Government have taken away a lot of its work.
	I have some specific questions to put to my noble friend. First, can he put to bed once and for all the idea that Post Office workers and sub-postmasters serving behind counters are not allowed to promote Post Office business? There have been instructions not to talk about the Post Office card account and to refer to other forms of banking. Secondly, building on what the Minister said at Question Time today, does my noble friend consider today's decision to be a building block on the way to getting a people's bank, something to which I referred earlier? There is no need to reinvent the wheel. We need only to take down the file for National Girobank, when the bank was given to the Alliance & Leicester Group, and start it up again. It would be as successful as it was during the 22 years of its existence. Specifically, I ask my noble friend this: when the Secretary of State says, "Let us look at all these products", will that be taken into account?

Lord McKenzie of Luton: My Lords, I thank my noble friend for his support for the announcement. He referred to the Government taking business away from the Post Office, but we live in a changing environment. In the debate just last week reference was made to the fact that many more people are now doing business via the internet, which has driven some of the changes that have been necessary in the network.
	On the proposition that Post Office employees and sub-postmasters are not allowed to promote Post Office business, I simply do not believe that that is the case. The market for the Post Office card account has declined from its peak of 4.3 million cardholders down to around 3.9 million at the moment. One development is that some people are moving from the Post Office card account, which has the advantage of simplicity as a channel for benefit payments—that is quite important in relation to the current legal advice that we have received—on to more traditional, mainstream bank accounts. By doing so, they can use the facility of direct debit, which as we know is one route to getting discounts on utility bills. Obviously we want to encourage that opportunity.
	My noble friend also raised the issue of the people's bank. This is a matter for colleagues in the Department for Business, Enterprise and Regulatory Reform, but again the remarks made this morning by my noble friend Lord Mandelson were as clear as they could be on his determination to explore a range of options in the financial sector and possibly others to enable the Post Office to flourish.

Lord Clark of Windermere: My Lords, I thank my noble friend for the Statement, which I welcome because I know that millions of post office users up and down the country will join me in doing so. I was particularly interested in the declaration in the Statement that in the future there will have to be more involvement in financial services. Perhaps I may return yet again to the suggestion that has just been made. We will never achieve real success until we get more support from the centre for the idea of a central people's bank. Is it not the right of every adult citizen to have a bank account? However, some of the most disadvantaged people—those who need it most—are not able to get an account with a commercial bank. Will the Minister look again at the proposals made 10 years ago for the Post Office to offer a deposit-based savings bank account for every citizen in the country who wants it?

Lord McKenzie of Luton: My Lords, again I welcome the support of my noble friend for the announcement and for the proposition about further involvement in financial services. I am sorry that I cannot give as full an answer as I might like in relation to plans around a people's bank and broadening the business opportunities for Post Office accounts. That is simply because those issues are not the responsibility of DWP. I know that I answer for the Government today and I apologise for the somewhat restricted presentation I have made. However, I take the point that it is right that everyone should be able to have a bank account. In many ways, it is the best route for the most vulnerable, for the reasons that I have just set out—lower utility bills and the assurance that their finances are as secure as anyone else's. A range of bank accounts and bank facilities can currently be accessed through Post Office Ltd—I have forgotten the exact percentage, although it is in my brief—and there is the basic bank account, which must be provided through the Post Office network. There is much to build on and I will liaise with colleagues in DBERR to ensure that the issues raised by my noble friend are rightly pressed.

Lord Borrie: My Lords, my noble friend will take from this discussion the strong desire from all parts of the House that we should take advantage of the present difficult economic situation to create and develop a people's bank and certainly to develop further today's Statement on the Post Office card account. That should be the first of many developments. Will my noble friend comment on the point, not so far mentioned, that Her Majesty's Government is, at least in part, responsible for a reduction in choice for the consumer in banking services by allowing rather rapidly a merger between Lloyds TSB and HBOS, which will reduce the number of clearing banks from five to four? The reduction in choice for customers could be made up for if, out of this crisis, the development of the Post Office becomes a government objective.

Lord McKenzie of Luton: My Lords, I thank my noble friend for his questions and for his support for the Statement. It is interesting that the Post Office can add some diversity to the financial services system, which has been made less diverse by current arrangements. My noble friend will understand why the merger was proposed and is proceeding and why other arrangements have been put in place to recapitalise the banks and to provide liquidity in the financial services sector. This is not to support those institutions in themselves but because the banking and financial services systems underpin everything else that we do in our day-to-day living and the trade and commerce on which we all depend. I note again the comments about a people's bank. I am sure that that issue was recognised by my noble friend Lord Mandelson earlier today.
	Let me highlight one point on the Post Office card account. We need to be careful about broadening the remit of that instrument because, as I said, its particular benefit is in its simplicity if it is perceived as a channel for the payment of benefits, particularly in the current climate. That proposition was key to the legal advice that we received. The announcement, the restructuring that preceded it and the review that is under way in respect of Royal Mail provide a real opportunity for the future.

Lord McNally: My Lords, I am aware that the time for questions on the Statement is over; I am not trying to intervene in that time. The Minister has answered the questions with his customary skill. However, there have been frequent references to the Secretary of State. The reason why the Works and Pensions Secretary made the Statement at the other end is that the Secretary of State responsible is at this end. If the Lord President were in her place, I would ask her—as I certainly shall—to raise this issue. When a major Statement is made where the Secretary of State is a Member of this House, it should be made by the Secretary of State.

Lord McKenzie of Luton: My Lords, I should make it absolutely clear that the department responsible for dealing with the Post Office card account is not BERR but DWP. The Secretary of State with responsibility for it is the right honourable James Purnell, who is making the Statement today in the other place. I do not want any misunderstanding on that point.

Lord Hunt of Wirral: My Lords, so that there is no misunderstanding, it is important to recognise the validity of the point made by the noble Lord, Lord McNally. The Secretary of State, the noble Lord, Lord Mandelson, chairs the Cabinet committee that is responsible for the Post Office network and on which sits James Purnell, the Secretary of State. It would clearly have been possible for the Secretary of State, the noble Lord, Lord Mandelson, to have come here and made the Statement, because he chairs the relevant Cabinet committee.

Housing and Regeneration Act 2008 (Consequential Provisions) Order 2008

Baroness Andrews: rose to move, That the draft order laid before the House on 15 October be approved.

Baroness Andrews: My Lords, noble Lords will remember the many excellent debates we had during the passage of the Housing and Regeneration Bill, which was much improved by the contributions of Members of this House. Today we are considering the draft of an order, the Housing and Regeneration Act 2008 (Consequential Provisions) Order 2008, which will make a number of amendments to legislation which are necessary once certain provisions of the Housing and Regeneration Act 2008 are commenced.
	Before going into the substance of this technical order, I should perhaps explain how it fits as part of a wider package of orders coming forward. In addition to this affirmative order, there are also two orders subject to the negative resolution procedure before the House. The first, the Housing and Regeneration Act 2008 (Consequential Provisions) (No. 2) Order 2008, is similar in nature to this one save that it amends secondary legislation. The second, the Transfer of Housing Corporation Functions (Modifications and Transitional Provisions) Order 2008, transfers the existing functions of the Housing Corporation to the HCA and the TSA. All of these orders are linked in timing to the commencement of Section 5 of the Housing and Regeneration Act 2008. There is nothing special about Section 5, other than that it is the first section that we have not yet commenced. All being well, this will all come into effect on 1 December 2008.
	It was a great pleasure to take the Housing and Regeneration Bill through the House because of the tremendous amount of cross-party support for the main purposes of the Act—the creation of the Homes and Communities Agency, bringing together investment and delivery, and the creation of a new regulator of social housing in line with the recommendations of the Cave report, Every Tenant Matters—and the many interesting and constructive debates we had on issues around these central principles. Noble Lords may be aware that these new bodies have been created, albeit in very limited form for now so that they can, for example, appoint board members. This order will come into force when the main powers and functions are turned on by or transferred from the existing bodies—the Commission for the New Towns, the Urban Regeneration Agency and the Housing Corporation—to the new ones.
	The purpose of the majority of the amendments in this order is, quite simply, to update references to predecessor bodies and other references in existing Acts to ensure that these reflect the position once the HCA has been created and the predecessor bodies abolished. There is nothing pertinent to the regulator in this order. Where taxation matters are concerned, the intent is to leave the current position substantially unaltered. So the effect of these amendments, other than in the rewording of existing Acts, is extremely limited. They do not contain substantive policy issues; they are simply technical in nature. They effectively change the name of the relevant organisation to the HCA in legislation and they therefore pass the existing powers and functions from the URA, the CNT or the Housing Corporation to the HCA. The amendments are aimed, quite simply, at maintaining the status quo.
	I suspect that noble Lords—especially those who were here at midnight last night—would not thank me for going into the detail of every individual amendment and so, on balance, I will not do so unless I am bound to under challenge from noble Lords. I have a line-by-line explanation but I shall forego that. However, it provides an opportunity to briefly update the House on what has happened since the Bill left here, received Royal Assent and became an Act. I say again how much the Act was improved by the contributions of this House, for which I was very grateful.
	Following on from that, work has continued apace to ensure that the HCA and the TSA can be up and running on 1 December 2008, four months ahead of the date originally planned. This work has included developing the necessary secondary legislation: the first commencement order, which allowed, among other things, the HCA and TSA to appoint board members, was laid in September; this affirmative order and the two negative orders that Parliament is currently considering; and a second commencement order giving the HCA the bulk of its powers and responsibilities is currently being prepared and is expected to be laid before the end of this month in time for 1 December.
	The HCA and TSA chairs, boards and senior management are in place. The HCA has conducted, and will continue to conduct, a series of regional stakeholder events setting out how the HCA will work and deliver. I am very impressed by the way in which Sir Bob Kerslake has involved the entire staff of the HCA in the formulation of the new body. It has been a very open and energetic process and is thoroughly to be commended.
	The department's sponsorship arrangements are being finalised and staff are being appointed. The various necessary pieces of corporate documentation for both agencies are either agreed or in the final stages of being agreed. The continuity of transferring CLG programmes has been safeguarded by 42 staff agreeing to transfer on secondment to the HCA, and those secondments vary in length between a few months and three years. HR and payroll systems are in place for both agencies and, where appropriate, have been tested. Arrangements are in place for the physical transfer of staff and data. Also with a view to a smooth transition to the new organisation, the HCA finance and IT systems have been tested successfully. The TSA financial systems are in place and are fully operational.
	To achieve the benefits expected from it, therefore, the HCA will need to create a truly single agency from its component parts, which also means a single culture. That process will start immediately after 1 December with the development of a new regional structure for the agency and will include a wholesale review of the agency's accommodation requirements and continuing work to create a distinctive culture for the HCA.
	The benefits offered by the HCA are already evident in the department's developing a response to changing market conditions. I shall take a few moments to talk about this because it is such an important part of what will be done. The HCA's scale and the flexibility that comes from having housing and regeneration programmes delivered by the single agency are valuable additions to our policy armoury. Further benefits will flow in the next CSR period when it may be possible to redesign existing programmes to fully exploit the synergies that are available from the single agency.
	The HCA is coming into being in a very different context from that in which it was conceived. To pick up the point made last night by the noble Lord, Lord Dixon-Smith, we are looking at a very different situation. There is unlikely to be any area of the HCA's business that is unaffected by the credit crunch. House purchasers and house builders and developers are unable to access the funding they need, and activity is slowing markedly. The scale and speed of the downturn in the housing market have been striking. In the context of a wider economic downturn, the role of the HCA is likely to be significant. There continues to be a significant gap between supply and rising demand for new homes, and the HCA will be central to addressing that gap.
	To support that, the Government are pressing ahead with the reforms that are needed to focus on the long term and condition the market and industry for growth, including repackaging surplus public sector sites and ensuring better infrastructure co-ordination. The HCA will obviously have a key role to play in that, as it will in the administration of HomeBuy Direct and the purchase of developer stock, both of which form key planks of the Government's response to the current economic downturn.
	As a means of delivering in this changed climate, the HCA has identified its key immediate priorities as having a close understanding of what is happening on the ground now and likely to happen in the near future, adopting a proactive, flexible and creative approach to ensure that as much market activity as possible can continue, and developing new approaches to broadening the base of providers and accessing new sources of finance. As a means of delivering against those priorities, the HCA is therefore developing plans to find effective ways of focusing on the delivery of social and affordable housing and housing supply; working closely with the RDAs on regeneration projects that are most at risk or in danger of stalling; making sure that money invested in regeneration and infrastructure assists in job creation; working as flexibly as possible with the housing developers by, for example, releasing smaller parcels of land, even if that is marginally less cost-effective; working with the financial sector to find new ways of funding that can help unlock the supply of homes; supporting local authorities and regions in their role in housing delivery, regeneration and development; developing, as quickly as practicable, original and innovative solutions and working flexibly to maximise the synergies across the programmes so that every penny counts; and involving local people and communities to make sure that its investment solutions are wanted and deliver what is needed. The HCA has to do all that without ever losing sight of the need for long-term sustainable development to create high quality places and housing and help combat climate change.
	The implementation of these plans should enable the HCA to continue to deliver against its objectives throughout this period of economic turmoil and leave us well positioned for the world that emerges from the current economic conditions.
	I have taken the liberty of explaining a bit of the context in which the HCA is now working. I hope that noble Lords will find that helpful and will approve the order.

Moved, That the draft order laid before the House on 15 October be approved. 28th Report from the Joint Committee on Statutory Instruments.—(Baroness Andrews.)

Lord Dixon-Smith: My Lords, it is a pleasure and a relief to see the Minister again on a subject so straightforward as the Housing and Regeneration Act 2008 (Consequential Provisions) Order, which consists of amendments to other legislation already on the statute book that are the natural consequences of the passing of that Act. To that extent, this is not particularly controversial. I am also grateful for her update on progress in the establishment of the Homes and Communities Agency and the housing regulator. It is good to know that that programme is going well, and the fact that it is likely to be completed ahead of the original schedule is a matter of satisfaction to everyone who has been involved.
	The questions that derive from the information I have received relate to the Minister's summing-up of the changing circumstances in which the whole construction industry finds itself. Behind the regulation a cost-benefit analysis was done, which we have all received. I wonder if the Government have had any opportunity to review those figures in the light of the very different economy in which we are now working and, if so, what their conclusions might be.
	I am bound to say that I had some difficulty here, but that may be because I do not understand the statistical background in resolving the actual figures that the cost-benefit analysis appeared to reveal. I would be grateful if the Minister could explain to me how that work was done, if that is not too technical a question, and tell me whether any attempt has been made to update those figures in the light of the changed circumstances.
	With regard to the content of the order, I have nothing to add to what the noble Baroness has said and I am grateful for her explanation.

Baroness Hamwee: My Lords, I, too, thank the Minister. I have only one question on the order and one closely related to it, which is certainly related to what both noble Lords have said.
	With regard to taxation matters, I think the words that were used were, "the position is substantially unaltered". I am sorry; it has only just occurred to me to probe that. I do not know whether that means "unaltered save for title", or whether there is anything more. I think the phrase, "leaving everyone as far as possible in a tax-neutral position" was also used, which raises the question of what is not possible. Is that disadvantageous? I should perhaps be looking in a different direction for this question.
	The Minister talked about the context of the order and referred to the rather different situation in which we now find ourselves, even though it seems only five minutes ago that we finished the Housing and Regeneration Bill. Local authorities up and down the country are working on local economic recovery plans, and I wonder whether the Minister has anything more that she can add about ways in which the HCA is working and intends to work with local authorities, because not every one will be the same. Are the Government satisfied that the model that we created in a spirit of co-operation is actually the right one?

Baroness Andrews: My Lords, I will start with that question first, if I may. In terms of the way in which the HCA sees itself as responding uniquely to the situation, what we have in the HCA has always been a single conversation, the language we used when considering the Bill. We also have the capacity for innovation to work in different ways, whether it is with local housing companies and local authorities or the opportunities that local authorities are considering regarding funding for the purchase of stock from developers, for example. The Housing Corporation will be involved with local authorities in all the initiatives we have put in place to try to free up the housing market.
	As of 2 October, of the £200 million a year marked for the purchase of stock from developers, the Housing Corporation has allocated £72 million, which will deliver 2,160 affordable homes. That obviously involves close conversations with local authorities. There will be a premium on what we can do by way of innovation and social housing, because this is where it will bite most specifically.
	All the information I have received from the HCA shows that it wants to work as flexibly as possible and is open to good ideas. That means working as flexibly as possible with housing developers. I talked about releasing smaller parcels of land as well as looking at what else local authorities can do in their allocations policy and the way in which priority groups are coming forward with their housing needs. The HCA will also work closely with the regions on housing delivery. One needs to look at the sustained pressure for more homes as well as the obvious failure of developers to access the cash to do the start-ups. We are looking at clearer leadership, less fragmented funding and more effective partnership. All that will benefit relationships with the HCA.
	It is our intention to maintain tax neutrality; all the provisions have been drafted on that basis.
	I do not have the cost-benefit analysis in front of me, but the circumstances have changed since the impact assessment was prepared, and we are aware that the financial benefits may not be as great or realised as soon as originally envisaged. I am very happy to write and explain how the methodology will help us to understand some of the differences that we are likely to see.

On Question, Motion agreed to.

Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008

Viscount Eccles: rose to move, That an humble Address be presented to Her Majesty praying that the order laid before the House on 29 September be annulled (SI 2008/2546).

Viscount Eccles: My Lords, it is six weeks since this statutory instrument was laid and nine months since the enabling powers went through at the time of the Banking (Special Provisions) Act, which dealt with Northern Rock. It seems timely that there should be a debate on the Bradford & Bingley order. It has been, in the nine-month history, a matter of some concern to the Delegated Powers and Regulatory Reform Committee and, latterly, to the Merits Committee, on both of which I sit. The views that I express are my own and not those of the committees, except to the extent that I quote what they say.
	Before going into detail, I have a comment on the commonly used phrase "business plan not working". That is a description which applies to Bradford & Bingley; it has been freely said that its business plan did not work. What meaning can we attach to the phrase? Both the constituent parts of Bradford & Bingley were founded in 1851, and I think the meaning has probably been the same since 1851. It is risky to borrow short and to lend long. The reason why a mortgage finance company—probably a better description of Bradford & Bingley than a bank—does this is to try to achieve interest differentials which favour its profit and loss account. But the process is risky, and if the short-term market dries up, what then? Presumably, it is something along these lines that happened to Bradford & Bingley, although, as will become clear as I bring out other points, we are very short of information.
	During the passage through the House in February of the Act dealing with Northern Rock, there was controversial discussion of Section 2(2)(a), on which the Treasury relies for the power to do what it has done to Bradford & Bingley. There were suggestions that the power was too wide and that it went on for too long, but there it is in the Act. It is under that section that the Treasury has taken the draconian action of confiscating the shares in Bradford & Bingley and simultaneously transferring property for £612 million to Abbey Santander. Into this story so far, the company itself, the board and the staff do not seem to have come. There has not been much in the public domain about discussions with the company, what the board thought about those discussions and what would happen to the staff. That is in sharp contrast to Northern Rock. Yet the Government have frequently said that they do not wish to manage banks. But they have sold off the continuing business and left themselves with the run-off of the existing book. That was all done on 29 September, in a great hurry.
	What has been said since? There have been three Statements by the Chancellor, repeated in this House, on 6, 8 and 13 October. On 6 October, the Chancellor said:
	"10 days ago, we had to deal with the problems at Bradford and Bingley. We transferred the savings business, the branches and the related jobs"—
	the concept of transferring jobs and not people is interesting—
	"to Abbey Santander, thus protecting savers, and took the rest of the company into public ownership. We acted decisively to protect savers and also to protect the interest of taxpayers, ensuring that the financial sector bears its share of the costs".—[Official Report, 6/10/08; cols. 23-24.]
	There was no debate on Bradford & Bingley following that Statement. That is not surprising, because the Statement was about the full-scale banking crisis, bringing in the G7, the IMF, Washington and whatever else. So the Bradford & Bingley was a very minor issue in the Statement on 6 October.
	There was a second Statement on 8 October which merely confirmed that the part of Bradford & Bingley in public ownership was going to be run off. One is left with the impression that this was really housekeeping. There was not much that was urgent about it; there certainly was no hint that there was a serious threat to the financial stability of the United Kingdom. This takes one back to what was said when the Act went through and when these powers were taken.
	The noble Lord, Lord Davies of Oldham, whom I am pleased to see in his place, said:
	"I emphasise again that the powers that we are taking are triggered only in the most extreme circumstances".—[Official Report, 21/2/08; col. 293.]
	On the 19 February, the Chancellor had gone rather further. He said:
	"There must be a serious threat to the stability of the financial system before the powers are exercised. That is a high test to be met, and the action must be proportionate. The Treasury must consider alternatives. The circumstances go way beyond simply a threat to depositors".—[Official Report, Commons, 19/2/08; col. 175.]
	That is the background.
	I deal now with the concerns of the Delegated Powers Committee. The House will remember that the committee thought that an order such as this should be subject to the affirmative, and not to the negative, procedure. The chairman of the committee, the noble Lord, Lord Goodhart, made at Second Reading of the Banking (Special Provisions) Bill on 20 February, at cols. 210-11 of Hansard, a detailed and strong representation to the House that the order should be affirmative. Circumstances seem to have proved the committee to be right, because such action as has been taken with Bradford & Bingley requires explanation and debate. Indeed, if the situation on 29 September was so urgent and threatening, one could argue that Parliament should have been recalled. Given that it was not, what permitted the holding-over of the situation until 6 October? As events have shown, the procedure should have been affirmative. Perhaps there was, and still is, some mismatch between what was said in February and what happened in September. In these times, when confidence is vital, it is not good for the Government to have said one thing some months ago and then to do another later.
	I turn to the Merits Committee. This is a long and complicated statutory instrument, considered on 7 October and reported on on 9 October. The committee said:
	"This Order is drawn to the special attention of the House on the ground that it gives rise to issues of public policy likely to be of interest to the House".
	Otherwise, all that the committee could do was to describe what was set out in the statutory instrument, because the Explanatory Memorandum and the regulatory impact assessment were short and sketchy.
	What did we learn from the two documents? We learnt basically that the Treasury considered that it had the power to do what it was doing under Section 2(2)(a) of the Banking (Special Provisions) Act and has done it. There were only three new things in the two documents. The first was the phrase in the Explanatory Memorandum, "temporary public ownership". We knew what that meant in relation to Northern Rock, because it was to be a continuing business, eventually to be sold back into the private sector. It is not the same with Bradford & Bingley. It would be interesting to know what the Minister thinks the phrase "temporary public ownership" means in current circumstances.
	The second new thing was the appearance of the Financial Services Authority on the scene. The regulatory impact assessment states that,
	"the Financial Services Authority has determined that a deposit taker is no longer meeting its threshold conditions for authorisation".
	That no doubt referred to Northern Rock. There was no detail or argument as to how that was connected with the decision to take Bradford & Bingley into public ownership. I thank the Library for looking for the FSA's determination with the best of its ability, which is greater than mine—I looked for it, too. We eventually received an answer from the FSA which stated that, for commercial reasons, its determination was not available to the public, nor to Parliament.
	The third new thing was the business plan. The RIA stated:
	"The government will put in place arrangements for a business plan to be developed for the remainder of Bradford & Bingley plc's business".
	That is a pretty conditional statement. A competent administration team for a run-off of a mortgage book would probably take about seven days, possibly 10, to work out a business plan, but, six weeks later, we have heard nothing but a short announcement that Sir Philip Hampton and Mr Kingman will get round to it later with the independent board of Bradford & Bingley, about which we know nothing.
	Much was missing from the Explanatory Memorandum and the RIA. There was nothing much on Part 5; there was nothing at all on Parts 6, 7 and 8. Part 6 relates to the Financial Services Compensation Scheme, which is an important part of what is being done. There was no description of the potential cost. As we saw earlier, on 6 October the Chancellor made reference to the sharing of cost, and it must have been to the relationship with the FSCS that he was referring.
	The Chancellor said also that it was the Treasury's duty to consider other options. All that the Treasury said to us about that was that the Government had considered a number of other options, including other expressions of interest from the private sector, and that it considered this to be the best solution. It gave no detail at all, not even a minimum description of what other options it had considered or a reason for its deciding that they were not suitable.
	The two documents are unsigned and no Minister is named, which is completely outside all practice for the submission of statutory instruments to Parliament and through the Merits Committee. Was nobody willing to sign? The central issue is why the Treasury considered it right just to record its power under Section 2(2)(a), but saw no need to give evidence for its view. Even the Treasury can be wrong. Nor is it self-evident, given the facts, that it has the power.
	Bradford & Bingley has a £42 billion book and about a 3.5 per cent share of the mortgage market. The book was surely not,
	"a serious threat to the financial system of the UK".
	If it was thought to be so, I ask how—of course, in some sense, it still is. Bradford & Bingley's £20 billion of retail deposits in the UK and the Isle of Man were held by 2.7 million retail depositors with an average deposit of £7,500. I repeat what the Chancellor said:
	"The circumstances go way beyond simply a threat to depositors".—[Official Report, Commons, 19/2/08; col. 175.]
	Were the depositors threatened anyway? How many of them had deposits of more than £35,000? After a wait of only three or four days, the figure increased to £50,000. It does not seem that the depositors were threatened, and there were no queues as far as I know at the Bradford & Bingley offices.
	What was actually happening to Bradford & Bingley? By then, the banking crisis was in full view, which was not the case when the legislation was passed last February. Bradford & Bingley relied to too great an extent—unwisely, as it turned out—on wholesale money. But surely it was more a victim of the circumstances than a threat. Its size was small, and the problems of the banking system were very large. The sums of money being quoted and the whole scheme at the beginning of October for the bailout of the banks was in figures that were way beyond anything that Bradford & Bingley could bring to bear on the financial stability of the United Kingdom. We need an explanation of the judgment that on 29 September Bradford & Bingley triggered the purpose of the Act, which is,
	"maintaining the stability of the UK financial system in circumstances where the Treasury consider that there would be a serious threat to its stability if the order were not made".
	I beg to move.
	Moved, That an humble Address be presented to Her Majesty praying that the order laid before the House on 29 September be annulled (SI 2008/2546).—(Viscount Eccles.)

Lord James of Blackheath: My Lords, I support the Prayer from my noble friend Lord Eccles. I declare that I sit on the same Merits of Statutory Instruments Committee with him that has given rise to the questions he raised. In this matter, he is absolutely right in his analysis that circumstances did not justify, under the criteria set by the original order, the draconian action being imposed on Bradford & Bingley in this case.
	I shall go back a further stage to suggest, as I have believed for a very long time, that the Government have been fundamentally wrong, root and branch, in their perception of how to mount a rescue of these banks that have gone into trouble since the days when the Northern Rock issue first crossed the horizon. Although the Bradford & Bingley is significantly less of a danger than Northern Rock was at the time, I still thought that the better solution for Northern Rock, and the right course of action for the bank, would have been to proceed down the path of regarding it as a conventional business workout and place it in the hands of an expert bank that could undertake this work along the lines of the Lloyds Bank proposal at that time. Today, that looks as though it would have been infinitely the cheapest solution available to the taxpayers in resolving that problem. It would also not have created the atmosphere of banking panic and crisis which eventually swept up Bradford & Bingley in its wake. I feel very strongly that the Government developed an appetite which then grew on that it did feed upon; they decided that they liked getting control of banks and that Bradford & Bingley became another vulnerable one that they could sweep up on the way.
	I shall not go down the same erudite and precise course of analysis that my noble friend did, because he has said it all and said it very well. However, I shall add two thoughts not so far aired in this House arising from this crisis and bring them to the attention of the Minister responsible for banking activities.
	First, to go back to the real core origin of the crisis, I suggest that it lies in the Consumer Credit Act 1974, which came in after the second coming of the Wilson Government and was brought about by the fact that, in the first coming of that Government, they relied very heavily on hire-purchase controls as the means of taking the heat out of the economy. In doing so, they inadvertently wrecked the British motor industry, leading to the formation of British Leyland and, eventually, to the bankruptcy of that business. In the course of that, they moved the Japanese market share of British car sales from 3 per cent to 22 per cent in a year, which gave rise to a massive impact on the balance of payments adversely to this country, which has never been corrected or repaired.
	The Government went to Professor Goode of London University and asked him to come up with a completely new credit package that could be translated into law, which came out eventually as the Consumer Credit Act. The banks did not like it very much because it did not give them any asset-backing security for the loans that they were making, which is what gave rise in turn to the creation of second mortgages, or sticking the additional finance for a car on the back of a house loan. That tended to give a huge emphasis to the importance of accruing values for houses as the only means of financing both the domestic economy and personal needs, and "taking the waiting out of wanting", in the dreadful phrase of the time.
	As time went on, the banks realised that by putting the credit for a motor car at a few thousand pounds into the back of a house loan, they were not doing as well as they had done in the old days of hire-purchase, because they could have charged higher and got a bigger profit out of it. So they decoupled the arrangement and started to work on the basis of a specific second mortgage, to which they could apply a different set of turns and rates. However, they went a stage further—and here is where I would like the Minister to give very careful thought. They separated the methodology by which they analysed the profitability of a loan, separating the interest from the capital repayment portion of each instalment.
	At that time, the banks relied on a ludicrous method called the rule of 78th, which is what you get if you take the months of the year from one to 12 and add them together. If you then take the months of the year and write them down in reverse against the one to 12, you get 13 against one, and so on. They decided that if, for example, you had £200 a month to pay back to a bank under one of these arrangements and you paid back £600 after three months, you had not paid back a quarter of the interest in that time. They added the 12, 11 and 10 together, which came to 33, and expressed that as a percentage of the total 78, which gave them something like 42 per cent—which meant that 42 per cent of the £600 that they had collected in three months gave them £240 of interest, which they claimed as their profit. That also had the disadvantage for the borrower that he still owed a higher proportion of capital, which was very unfair and has remained unfair ever since.
	From that position to what we have now, we have reached a situation in which banks that were created as banks after the demutualisation of the building societies went down this path and were able to show a massive advance in profitability, arising in comparison with conventional clearing street banks, because they were using this old hire-purchase-type profit extraction formula. As a result, the stock market loved them, rights issues were snapped up, money flooded in and a disproportionate amount of money came in to the least responsible, newest and most inexperienced arm of the banking community and drove it up to the point where it unbalanced the national economy by creating purchasing power with what was really false money. It did not exist; it was being put up and subscribed on a myth.
	I suggest to the Minister that one of his first priorities should be to discuss with the Accounting Standards Board the methodology by which a single formula could be established for the extraction of the profit content of all lendings and repayments, whether for clearing banks or building societies. In future, we could take the heat out of the overgrowth of the secondary banking market and never have this awful situation occur again. That would be the first and biggest thing to take us out of the boom and bust cycle that could be done by this Government, which they have not done so far.
	Secondly, I suggest that one thing could have been done very simply a long time ago, which should now be done. We should ask the auditing profession to do a little more to earn its money. It gets very well paid and it could do one thing for us all that could very well save us from having this panic-stricken crisis situation occur again. That is, we should ask them in all audit certificates in future ever signed on behalf of a lending institution of any sort—and on behalf of anyone in, say, the Times top 1,000 as well—to have a certified working capital certificate for 12 months from the date of the signing of the audit certificate. That certificate should make it clear that it has been reviewed and assessed in the context of the known business plans of that company concerned. It would not have stopped Northern Rock going bust, but it would have given us a year in advance to decide what to do about that while we decided what the industry could do to save it.
	I make those two recommendations. My noble friend has given a very reasonable argument why this provision was wrong on this occasion, but none of us would be here today if we had had those two changes in the law previously.

Lord Howard of Rising: My Lords, we on this side of the House will not oppose the order, but I hope that the Minister will answer the questions and comments of my noble friends Lord Eccles and Lord James of Blackheath, which were a most erudite contribution to the debate. In particular—I am sure that other noble Lords will be interested in hearing the answer—who was the Minister responsible for the original action with regard to Bradford & Bingley, and who is the Minister now responsible? My noble friends, who are both members of the Merits Committee, asked a vast number of questions. I look forward to hearing them answered by the Minister.
	I should also be grateful if the Minister could clarify who regulates this particular financial institution. On Tuesday, 11 November, in response to a question put by me, the Minister said:
	"The responsibility for the regulation of institutions rests with the FSA, and the FSA alone".
	A few moments later he said:
	"My Lords, noble Lords know that the initiative for regulation will remain in this country with the Financial Services Authority, the Bank of England and Her Majesty's Treasury through the tripartite arrangements".—[Official Report, 11/11/08; cols. 549-50.]
	I wonder which statement is correct.

Lord Myners: My Lords, I am grateful to the noble Viscount, Lord Eccles, for initiating today's debate—a debate which he described in his introductory comments as timely—on the Bradford & Bingley order. I am also grateful to the Merits of Statutory Instruments Committee for its important work on the instrument. The noble Viscount, Lord Eccles, brings to his observations a distinguished record of achievement in industry, investment and corporate regulation. I was also pleased that the noble Lord, Lord James, with his experience in this area, has been able to participate in the House's discussion.
	Before I respond to the points raised in the debate, it may be helpful if I set out the record of how we got to this point. Following extraordinary turbulence in global financial markets, Bradford & Bingley found itself under increasing pressure as investors and lenders lost confidence in its ability to carry on as an independent institution. The noble Viscount asked what we meant by "the business plan not working". We simply mean that the business plan which hitherto had worked was no longer working because of a serious loss of confidence in the institution on the part of those placing deposits with it.
	On Saturday, 27 September, the Financial Services Authority determined that Bradford & Bingley no longer met its threshold conditions for operating as a deposit taker under the Financial Services and Markets Act 2000 and the FSA's own rules. At that point, the Government, on the advice of the FSA and the Bank of England, in accordance with established tripartite practice, acted immediately to maintain financial stability and protect depositors while minimising the exposure of taxpayers. Officials worked over that weekend to bring about a part-public, part-private solution which best met those objectives.
	The tripartite authorities had explored a range of private-sector solutions before taking action. I hope that the noble Viscount will realise that it is extraordinarily difficult to put into the public domain issues of high confidence in discussion with other banking institutions. Quite frankly, to have detailed with any precision those discussions, while it may have satisfied our curiosity and wish to better understand the circumstances here, would, in the judgment of the Government, have severely impeded the opportunity to have similar discussions should they be required at some further time in the future.
	The Government concluded that a transfer order under the Banking (Special Provisions) Act 2008 best delivered the Government's objectives of maintaining financial stability, protecting consumers and protecting the taxpayer. This action taken in relation to Bradford & Bingley demonstrated that the Government stood by, and continue to stand by and ready, to do whatever is necessary to maintain the stability of the UK financial system, and confidence in that system.
	The noble Viscount quoted my right honourable friend the Chancellor of the Exchequer as setting a high test for the exercise of such orders. I assure him and other noble Lords that in our judgment the circumstances here were such that a failure to take action to protect the interests of the depositors of Bradford & Bingley and to reassure people that they could have confidence in the British banking system would have had adverse consequences had we not taken that action. The fact that there were no queues outside Bradford & Bingley does not mean that this was not a serious situation. The fact that there were no queues is largely a consequence of the decisive action taken by the tripartite authorities.
	That is how Bradford & Bingley got to this point. I thank the noble Viscount for his erudite summary of the finances of that institution, in particular his important observation that this organisation had, with the benefit of hindsight, become overly dependent on wholesale deposits. Since 1851, Bradford & Bingley had largely funded itself from its own retail deposits, but it changed its whole culture and business ethos as a consequence of or immediately after demutualisation. In so doing, it significantly increased its riskiness.
	As noble Lords are aware, the flexibility in the Banking (Special Provisions) Act allowed for an immediate transfer of Bradford & Bingley into public ownership and for the onward transfer of the retail deposit business to Abbey National. That was crucial for maintaining financial stability and ensuring that customers retained access to their accounts. The noble Viscount described that as "draconian". I would beg to suggest that most of Bradford & Bingley's depositors were delighted that that action was taken in order to ensure that their interests were well protected and, in so doing, others could see that the interests of depositors with British institutions would be similarly protected in similar circumstances should that be required.
	This is the second order under the Banking (Special Provisions) Act since it was passed by Parliament in February this year. As noble Lords will remember, the Government used an order under the Act in February to transfer Northern Rock into temporary public ownership. Unlike that order, the Bradford & Bingley transfer order which we are debating today exercises the power to make a further transfer following a transfer of a bank to the public sector. Let me summarise for noble Lords some of the key components of the transfer order.
	First, the order transferred Bradford & Bingley into public ownership through the transfer to HM Treasury of the company's shares. Secondly, the order was used to transfer Bradford & Bingley's UK and retail deposit business, its branch network and its shares in its Isle of Man subsidiary to Abbey National plc. The liabilities were backed by a contribution from the Financial Services Compensation Scheme and the Treasury. The balance of Bradford & Bingley's business remains in public ownership. That includes its mortgage book, personal loan book and headquarters.
	The decision to make the second transfer of the retail deposit business was based on the need to protect depositors in the then prevailing market conditions of a wholly private sector solution. As I explained to noble Lords, the authorities explored possibilities for a private sector solution. The Government concluded that Bradford & Bingley was not sustainable to be run on a stand-alone basis in a circumstance where it had lost the confidence of depositors.
	Through the two transfers under this order, a stable resolution for the whole of the bank was achieved. It has been effective in enabling the Government to protect depositors and maintain financial stability. The transfer of the retail deposit business to Abbey National, a stable institution, was achieved without any disruption to customer service and maintained financial stability.
	The Banking (Special Provisions) Act 2008 also provides for a compensation order to be made. The Treasury will define a scheme for determining the amount of any compensation payable to the former shareholders and others who may have been affected by the transfer of shares into public ownership. To this end, the Treasury will lay a compensation order within three months of the transfer order, as defined in the Banking (Special Provisions) Act.
	I draw noble Lords' attention to issues surrounding the Financial Services Compensation Scheme and the triggering of payments. Following the FSA's determination that Bradford & Bingley was unable, or likely to be unable, to satisfy claims against it, the Financial Services Compensation Scheme was triggered. Therefore, under the transfer order, the FSCS paid out approximately £14 billion to enable retail deposits held in Bradford & Bingley and covered by the FSCS to be transferred to Abbey. The Treasury made a payment to Abbey for those retail deposit amounts not covered by the FSCS, amounting to approximately £4 billion. That was the top-up over and above the maximum amount guaranteed by the FSCS. These amounts should be repaid by Bradford & Bingley from the realisation of the assets of the remaining business. The company will pay down its liabilities to FSCS and HMT as it is wound down over time; that is to say, as assets are sold and mortgages are repaid by Bradford & Bingley's customers.
	I draw noble Lords' attention to the new Banking Bill and how it will affect similar situations, should they ever arise in the future.

Viscount Eccles: My Lords, before the Minister moves on, I hope that I may ask one quick question. He just mentioned a liability to HMT. What is that?

Lord Myners: I thank the noble Viscount, Lord Eccles, for that question. As I explained, that is the amount paid over and above the amount covered by the FSCS—the guarantee of all retail deposits. In preparing the permanent replacement to the Banking (Special Provisions) Act, the Government have sought to refine and develop the powers in that Act. This has included extensive consultation with interested stakeholders. The new Banking Bill provides a package of permanent measures which we believe will be a significant improvement on those previously available to handle such a situation.
	In taking Bradford & Bingley into public ownership, we put in place a number of additional controls to ensure that taxpayers' interests were protected. The Treasury has published on its website a shareholder framework document with Bradford & Bingley and I have laid a copy in the Library today. This framework document sets out an appropriate corporate governance structure for the day-to-day interactions between HM Treasury and the company and the people who will be managing the company. It sets out HM Treasury's delegations to the company and where the Treasury's approval is necessary to protect its interests in Bradford & Bingley.
	As announced by the Chancellor, there will be no compulsory redundancies, other than the job cuts previously announced, for the six months following 29 September. However, we are working closely with Yorkshire Forward and other agencies to handle that situation as effectively as possible. Bradford & Bingley is currently developing a business plan. I am in awe of the ability of the noble Viscount, Lord Eccles, to produce a business plan in seven days. I have some modest experience in business. However, the circumstances facing Bradford & Bingley are such that a few more days than seven are probably required to produce a viable business plan for the business going forward. Particular care will be required because the business plan will need to satisfy European Commission state aid requirements. A state aid restructuring notification will be submitted to the Commission for approval within six months of the grant of emergency state aid; that is, by March 2009.
	The noble Viscount, Lord Eccles, also referred to the establishment of UK Financial Investments under the chairmanship of Sir Philip Hampton, and the role that institution will play in overseeing the Government's investment in Bradford & Bingley. I assure the noble Viscount that, from my perspective, the Government have no wish to manage banks or to have any more banks in their portfolio. However, the risks that we faced as a result of a collapse in confidence as a consequence of the global financial crisis were such that we clearly had to act in order to forestall further problems. Confidence is a fragile flower and if people believe that they cannot be confident in a UK deposit-taking institution, they will begin to query any other institution which they fear is at risk of not being able fully to honour its obligations.
	The noble Viscount, Lord Eccles, asked what we meant by temporary public ownership. The best answer I can give is, not in permanent public ownership; that is, we will, as our response to Bradford & Bingley's business plan, and within the framework agreement that we are establishing between HMT and Bradford & Bingley, fully explore all opportunities to realise value from ownership.
	The noble Lord, Lord James of Blackheath, provided the House with a most informed explanation with smatterings of Shakespearean quotations and historic perspective. I am indebted, as, I am sure, are many others, to the noble Lord for his explanation of the background to consumer credit legislation. I was pleased to be reminded about the rule of 78s, which I had forgotten. He made important points and invited me to consider accounting and auditing issues. I assure him that I will do so. I may well invite him to join me for further discussion on those matters. I respect his considerable knowledge on such matters.
	I should like to clarify for the noble Lord, Lord Howard, that the existing structures for regulation, supervision and the operation of the tripartite arrangements remain intact. From my perspective, the tripartite structure is architecturally sound and robust. In the case of Bradford & Bingley, the opportunity for Government to be advised by both the Bank of England and the Financial Services Authority certainly proved effective.
	The noble Viscount, Lord Eccles, asked why the instrument was not signed. I hope that I may reply to him in writing on that as I am not fully advised on it. However, if this was an oversight, I apologise for those who failed to comply with the appropriate process.
	I hope that I have managed to cover the main points raised by noble Lords. If there are any that I have failed to cover, I will be more than happy to write with a full and complete explanation to those who have taken part in today's debate. In the circumstances, I hope that the noble Viscount, Lord Eccles, will feel able to withdraw the Motion.

Viscount Eccles: My Lords, I thank those noble Lords who have participated. I hope that my noble friend Lord Howard considers that his question has been answered; no doubt if he did not, he would be able to look after himself.
	My noble friend Lord James has expertise in workouts. In that part of what he said, he was really saying that confidence was more damaged by the way in which the Bradford & Bingley problems were dealt with than it would have been if it had been allowed to go into a conventional workout, given the fact that the depositors were, in the great main, guaranteed under the guarantee scheme. I think he was telling us that that would not have cost as much money in the long run. Indeed, we are still very short of any idea of how much this exercise is going to cost the taxpayer.
	I am very grateful for the detailed exposition given by the Minister, which was part of my intention in holding the debate. We are going to be in a state of some disagreement, talking as a member of the Merits Committee, as to how much of that explanation could have perfectly properly been in the Explanatory Memorandum and the regulatory impact assessment. I venture to suggest to the Minister that the Treasury is a minimalist department in the matters of explanation and justification. Quite a lot of things could have been in there that would not have prejudiced any of the things that the Minister mentioned. Indeed, it is quite possible that public confidence would have been improved, rather than the reverse.
	I have three points. I got the impression from the Minister's statement that we may not be in run-off, because a business plan for a run-off is a totally different matter from a business plan for, if I may mention them, Marks & Spencer or Courtaulds Textiles, of which I was chairman, which was Marks & Spencer's largest supplier of clothing. We had to have a rather detailed business plan to live with Sir Richard Greenbury, who was the chairman at the time. A run-off of a mortgage book is not a very complicated matter. I have been responsible for mortgage finance companies in places as far apart as Hong Kong and Nairobi, and it is really not a complicated matter. If we are not going to be in run-off with Bradford & Bingley, that is a different matter.
	Finally, I appreciated the Minister's explanation, but I did not really get to know whether it was the Government's view that this was a serious or systemic threat to the stability of the United Kingdom financial system. Given everything else that was going on, and given the lack of confidence in Bradford & Bingley that the market had expressed all through the summer—it did not just come in September; it had been ongoing for quite a long time—was this really the right way to deal with the matter? I suppose it is always possible that someone will test the proposition and seek evidence to try to determine whether there really was a serious threat on 27 September. I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.

Royal Assent

Lord Colwyn: My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
	Planning and Energy Act 2008,
	Human Fertilisation and Embryology Act 2008,Children and Young Persons Act 2008,Employment Act 2008.

House adjourned at 2.24 pm.